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claimed with his unfailing enthusiasm: "Kolossd 
scldimm!” (“Perfectly awful”). This verdict prob- 
ably sums up the financial position of Germany and, 
since the beginning of the East African campaign, 
of Italy as well. 






MACMILLAN & CO.. Liuxtbd 







A Study of the Economic and Social Policies 
of the Totalitarian State 






Cofynght, 19SS, by 


All righta reserved— no part of this book niay be 
reproduced in any form without permission in writing 
from the pubfisher, except by a reviewer who wishes 
to quote brief passages in connection with a review 
written for inclusion in magasine or newspaper. 

Published January, 1936 
Reprinted June, 1936 
Reprinted February, 1938 



It would seem almost inevitable that a student 
of Russian Bolshevism should yield sooner or later 
to the- temptation to examine the ideas and institu- 
tions of Fascism and National Socialism. In spite 
of the open hostility that exists between the 
U.S.S.R., on the one hand, and Fascist Italy and 
National Socialist Germany, on the other, there are 
striking similarities between them; similarities that 
lie perhaps not so much in the principles as in the 
methods of the two antagonistic systems. Intellec- 
tual curiosity sometimes works with greater preci- 
sion than does economic determinism. I have long 
been interested in the Soviet Union, in the evolu- 
tion of Communist ideas and of the economic insti- 
tutions of the proletarian State. In the end this has 
led me to embark upon a more intensive examina- 
tion of the experiments that are being conducted in 
Italy and Germany. The present book is the out- 
come of this intellectual adventure. The task has 
been a fascinating one, but it has also been one full 
of pitfalls and dangers. An obvious difficulty that 
the student of Fascism and National Socialism has 
to face is presented by the processes of continuous 
remodelling at work in the institutions of Italy and 
Germany. Although in Italy Fascism has been in 
control for thirteen years the Corporate State is still 




far from completion. Under the pressure of neces- 
sity and of changing ideas it has been subjected to 
endless readjustments, significant departures from 
the original blueprints which were never very clear. 
Will the Corporate State of today, assuming that it 
survives the test of time and the buffetings of the 
political tempest now raging over Europe and Africa, 
be in the future more like the ideal for which Mus- 
solini is striving than are the present institutions 
of the Soviet Union like those of the ideal classless 
and stateless community of the Communist dreams? 
The question may well be asked. 

What is true of Italy is even more so of Germany 
where the National Socialist State is just entering 
upon its fourth year. The work of reorganization, 
whatever we may think of its intrinsic value, that 
has been done by the Hitler Government in this 
brief period is truly amazing. It seems certain that 
much of it is of a merely provisional nature, again 
assuming that National Socialism withstands the 
test of time. In spite of these obvious and substan- 
tial limitations certain principles underlying both 
the Italian and the German structures and some im- 
portant outlines of the structure itseK emerge with 
a reasonable degree of clarity. An attempt to grasp 
and describe them may not be entirely useless. 

The second and even more formidable difficulty is 
the inescapable fact that Fascism and National 
Socialism — ^the latter especially — are among the 
burning problems of the day. The atmosphere of 
political passion that at present envelops Italy and 



Germany confuses the issues, obscures one’s judg- 
ment, and makes anything but easy that attitude of 
serenity and objectivity which is the very essence of 
a scientific investigation. The ability to understand 
the point of view of other people, even when one 
does not share it, is in my opinion the only real 
criterion of culture. By lhat criterion I have tried 
to govern myself in this study. This does not mean, 
of course, that I have refrained from criticism or 
from expressing my own views. What I have tried 
to do however is to interpret the Fascist and Na- 
tional Socialist policies not only from our, but also 
from their respective points of view. To what extent 
I have succeeded it is not for me to judge. 

My knowledge of Germany goes back to pre-war 
days. Since the war I have several times returned 
to Germany; in 1932, a few months before the Nazi 
Revolution, again in 1934 in connection with a study 
I was then making of the Saar problem, and finally 
in the summer of 1935. I was a frequent visitor to 
Italy between 1919 and 1926, usually for two or 
three months at a time. This afforded me ample 
opportunity to follow the growth of the Fascist 
movement from its very birth. I was also in Italy in 
the summer of 1935. My last visits to both Ger- 
many and Italy were made with the special purpose 
of completing the present study. In both countries 
I discussed the various problems dealt with in the 
following pages with a large number of people, from 
high government officials and members of the Fas- 
cist and National Socialist parties to their most out- 


• ■ * 


spoken opponents. All alike showed me great cour- 
tesy and devoted much of their valuable time to 
answering what must have been to them endless and 
probably not infrequently tedious questions. For 
obvious reasons I will refrain from making any spe- 
cific acknowledgments. I regret this enforced silence 
because my gratitude is sincere and profound. 

Professor I^eo Wolman, of Columbia University, 
was good enough to read the manuscript, and Profes- 
sor Philip C. Jessup, also of Columbia University, has 
read my last chapter. They have both made valuable 
criticisms and suggestions but are, of course, in no way 
responsible for the opinions I have expressed. I 
am deeply indebted to Miss A. M., who wishes 
to remain anonymous, for the translation of the 
German poem which appears on p. 81. I must also 
express my very real appreciation of the interest 
taken in my work by my publishers, The Macmillan 
Company of New York. The encouragement they 
have given me has been to no small degree instru- 
mental in the fulfillment of a diflBcult undertaking. 
Arthur E. McFarlane has rendered invaluable serv- 
ice to my readers by helping me in my struggles 
with English. For the imperfections that may still 
remain my obstinacy alone is to blame. I am also 
very grateful to Mrs. Cecil P. Killien for her help 
in preparing this manuscript and for her many use*- 
ful suggestions. 

Michael T. Florinskt. 

December 9, 1935. 

Columbia University, New York City. 





The Roots of Fascism and National Socialism. 
The Birth of Fascism. The Fascist Party. The 
March on Rome. Mussolini and Parliament. 
Toward a Dictatorship. The Party and the State. 


The Setting. The Hitler Movement. The Rising 
Tide. The National Socialist State. The Fascist 
and the National Socialist Revolutions. 


The New Creed. The Nation and the State. Hier- 
archy and National Solidarity. Italian and Ger- 
man “Socialism,” The Heroic Element. The Doc- 
trine and the Rank and File. 


The End of Economic Liberalism. The Corporate 
State. The Corporate State in Action. The German 
Version, State Intervention, Business in the Totali- 
tarian State. 






The Basic Principles. Industrial Relations in 
Italy. Labor under Fascism. Industrial Relations 
in Germany. Labor under National Socialism. The 
Balance-Sheet. 118 


The Ideological Foundation. Bonifica Integrale. 

The "Battle of the Wheat.” Hereditary Farms in . ^ 
Germany. The Reichsndhrstand. The Rhon Plan. 
Agriculture and the State. 155 


''Autarchy. Italy’s Fundamental Weakness. Italy’s 
Financial and Trade Policies. Germany’s Position. 
Germany’s Financial Policies. The Verdict. 192 


The Background. The New Way. The Romantic 
Element. The Step-Children. The Church. The 
Jewish Question. Democracy vs. the Totalitarian 
State. 222 


The Chief Factors. Italy and Abyssinia. The 
League of Nations and the Conflict. The Case of 
Germany. 252 

Bibliography 277 









In dealing with such vast national and social 
movements as Fascism and National Socialism one 
naturally hesitates to attempt to explain them in 
terms too simple. Like the Russian Revolution of 
1917 these movements have their roots in the past, 
and cannot be completely understood without an 
eidiaustive study of the political and social condi- 
tions in Italy and Germany long before the appear- 
ance upon their horizons of Mussolini and Hitler. 
It became customary among the historians writing 
on the origins of the war of 1914r-1918 to speak of 
the “immediate” and the “remote” causes of the 
war. This differentiation will be found useful if 
applied in the case of Fascism and National Social- 

Of Hie remote causes which brought about the 
downfall of democracy in Italy and Germany little 
will be said here. The subject is too vast and would 
require a volume of its own. The immediate causes 
underlying the appearance of Fascism and National 
Socialism are also anything but simple. There are 
one or two, however, that emerge from the cloud of 
conflicting interpretations and opinions and seem to 



be of primary importance. The first is the profound 
disappointment which the outcome of the war 
brought to both Italy and Germany. Here paradox 
enters in: a victorious and a defeated nation both 
found themselves losers at the end of the struggle. 
Without going into the details of the Italian de- 
mands at Versailles and the bitter controversy that 
raged around the Fiume question and led to the 
temporary withdrawal of the Italian delegation from 
tile councils of the victorious Powers, it will be 
enough to recall the fact that Italy obtained no 
share of the colonial Empire of Germany and had to 
accept a minor readjustment of the frontier of her 
African possessions. The expansion in Asia Minor, 
which was promised her under the terms of the Lon- 
don secret treaty of 1915, failed to materialize. It is 
true that Rome was given extensive territories in 
Europe. But these territories were believed by Italy 
to be less than her due and their economic value 
proved to be slight. That thirst for imperialistic 
expansion, which the other Great Powers had satis- 
fied in earlier days and which is behind the venture 
of Fascism in East Africa, in Italy remained un- 
quenched. The disillusionment of the country found 
its expression in the well-known Fascist saying that 
Italy had won the war but lost the peace. 

As for Germany, her defeat in 1918 was made 
even more intolerable by its overwhelming sudden- 
ness. To almost the last moment the army and the 
bulk of the population were still living under the 
delusion that the hour of victory was merely to be 


postponed a little longer. After immense sacrifices 
for what the country believed to be a great national 
cause Germany’s people had to drink to the dregs 
the bitter cup of humiliation. They had to accept 
the terms of a treaty which deprived the Fatherland 
of not only a large portion of its European territory 
but also of the whole of its colonial empire. Upon 
Germany there was also imposed what eventually 
proved to be an intolerable burden of reparations. 
She was likewise forced to accept the provisions of 
Article 231 of the Treaty of Versailles which de- 
clared her to be the aggressor and which was gen- 
erally interpreted as meaning that she was respon- 
sible for the war. This fateful article played no 
small part in paving the way for the triumph of Na- 
tional Socialism and in bringing not thousands but 
millions to rally to the swastika banner. The abyss 
which separated the glory of the past from the mis- 
ery of the present was such as few nadons have 
experienced in history. 

To this bitter disillusionment and disappoint- 
ment at the outcome of the war the popular reac- 
tion, whether in Italy or in Germany, was the same. 
Public wrath turned against those who only yester- 
day had been the great national heroes, and ex- 
tended to all who took an active part in the war 
itself. Soldiers in uniform no longer dared appear 
in the streets for fear of molestation. The doctrines 
of Socialism and Communism won converts by the 
thousand, and the red flag began rapidly to displace 
the national colors. On the horizon loomed what was 


believed to be the menace of Bolshevik revolution. 
The “International” was the order of the day, and 
it was in the nationalist reaction against these con- 
ditions that both Fascism and National Socialism 
found their initial impulse. But the road that led to 
victory was determined by factors peculiar to each 


Viewed in retrospect the Italy of 1919-1922 pre- 
sents an extraordinarily vivid and animated picture, 
one full of color, excitement and tumult. The sump- 
tuous piazzas of the large cities, with their noble 
palazzos and majestic cathedrals, and the narrow 
streets of the small towns and villages were filled 
with milling and riotous masses of ex-soldiers and 
men too young to have served in the war, wearing 
picturesque uniforms and carrying the Italian tri- 
color, the Fascist insignia, or the red flag of the 
revolution. The opposing groups often clashed and 
fought each other with a bitterness and determina- 
tion which reminded the former soldiers of the most 
furious and exalted hours of their wartime days. 
From the aloofness of the Quirinal the Crown 
watched the rising of new social forces which an im- 
potent Government and an equally impotent Parlia- 
ment, supported by a complacent, inefificient and 
corrupt bureaucracy, were unable to check or con- 
trol. Against the shifting background of ephemeral 
political combinations often determined by obscure 


local causes, there outlined itself a no less ephemeral 
array of political leaders headed by the romantic 
figure of Gabriel d’Annunzio, poet, soldier and hero 
of Fiume. But gradually a thunderous voice from 
Milan and the imperious gesture of Benito Musso- 
lini succeeded in dominating the tumult, and in a 
few brief months the head of a small band of intel- 
lectuals and revolutionaries from the great industrial 
city of northern Italy rose to undisputed mastery 
over the country. 

The origin of the Fascist movement goes back to 
the *‘Fasd d'Azione Rivoluzionarid* organized by 
Mussolini in 1914-1915 for the purpose of bringing 
Italy into the war, an activity which led to his 
expulsion from the Socialist Party at the end of 
November, 1914. There is however no direct connec- 
tion between these early fasd and those which came 
into existence in 1919, although their spiritual kin- 
ship is clear. In either case they were primarily a 
protest against the inaction, the “neutrality” of the 
Government, and the political and social sj'stem it 

The end of the war took Italy, as it took every 
other country, by surprise. Her economic resources 
were largely exhausted. Hundreds of thousands of 
men demobilized from the army were vainly looking 
for jobs. Inflation led to a rapid increase in prices, 
continuous demands for higher wages and grave dis- 
turbances among industrial workers. Communism 
was making converts not only among the urban 
proletariat but also among agricultural laborers. It 


is one of the peculiarities of the economic structure 
of Italy that in certain parts of the countrj' agricul- 
ture is carried on by the large-scale employment of 
day laborers. Such districts, for instance, as those 
around Bologna and Ferrara proved particularly 
susceptible to extreme Socialist teachings. The 
unions of rural laborers were largely in tlie hands of 
political bosses who, even during the war, prac- 
tically controlled the entire life of their respective 
districts, making themselves equally objectionable 
to landlords and to non-union labor. In certain 
cities there was also a great deal of discontent among 
the small traders who felt that they were being 
crowded out by the aggressive methods of the 
Socialist cooperative societies. In 1919 and 1920 a 
number of factories were seized by the workers, 
some under the national flag, as a protest against the 
proposed lockouts by the owners, but mostly under 
the red flag and to the accompaniment of slogans 
which were more than suggestive of Russian Bol- 

Such were the economic factors w'hich underlay 
the rise of the Fascist movement. It w’as a struggle 
against the red revolution, but a struggle conducted 
not infrequently by groups that were themselves 
advocating advanced radical doctrines. It was pri- 
marily a protest against the inefiSciency and weak- 
ness of the existing system of government, which 
had to take the blame for Italy’s failure to obtain 
at Versailles what the country felt it was entitled 
to. It was also a protest against the violent anti- 


militarism of the Socialist and Communist groups. 
They turned their wrath upon the “interventionists” 
and often insulted and attacked anyone who dared 
to appear in the streets in uniform. At the best, 
those who had never seen the firing line treated with 
contempt men who had spent long months in the 
trenches and who felt that they had done their duty at 
the price of immense personal sacrifice; they re- 
garded them as mere puppets in the hands of dema- 
gogues who had foolishly forced the Government to 
espouse the cause of the Allies. Professor Herbert 
W. Schneider is right when he says in his book, 
Making the Fascist State, that although no doubt 
the situation which existed in Italy in 1919 was due 
to economic causes, “the struggle soon assumed a 
character which no economic interpretation could 
possibly explain.” What Fascism sought to do was 
to defend and justify the country for having entered 
the war, to stress the victory it had won, to de- 
nounce Bolshevism and the parliamentary system 
which it held responsible for the paralysis from 
which the Government was suffering. 

Fascism was originally a spontaneous movement, 
decentralized and uncoordinated. Its aims and its 
immediate objectives were as varied as the social 
groups from which it drew its support. Local con- 
ditions and the personalities of local leaders had 
much to do in determining the form of organization 
and the aims for which it fought. In addition to 
those mentioned above, some of the fasd had defi- 
nite objectives of their own. The jasci of Trieste, 


for instance, had set themselves against Slavic and 
those of Bolzano against German influence. While 
the bulk of the supporters of the Fascist movement 
came from the lower middle classes and the intel- 
lectuals, this was by no means universally true. In 
Cremona, for example, the movement appealed from 
the very beginning to the industrial workers, an 
appeal due in no small degree to the politics of its 
leader, Farinacci. Some fasci had a distinctly intel- 
lectual complexion — ^for instance those of Pisa and 
Florence. Some were Catholic, others were anti- 
clerical and Free Mason. Some supported the Fiume 
venture of Gabriel d’Annunzio, others violently op- 
posed it. Some were still upholding the monarchy, 
while others were strongly republican. Speaking 
rather loosely, Fascism was a broad social movement 
which consisted largely of lower middle-class people, 
intellectuals, students, but also to a lesser extent of 
workers and, in its later phase, of peasants. It had 
moreover the support of a number of large industrial 
and agricultural corporations who saw in it a power- 
ful weapon against Bolshevism. Fascism appealed to 
the imagination of millions of Italians who cherished 
the tradition of the Risorgimento, the tradition of 
Garibaldi and Mazzini. It attracted youth in great 
numbers by its picturesque pageantry, its uniforms, 
rites, processions and watchwords full of the provoc- 
ative and reckless spirit of the generation which 
had known the uplift of victory and the bitterness of 
defeat. This spirit was accurately if not elegantly 
expressed in the well-known slogan “me ne frego,’* 

THE ECIiIPSE OP demo(»act; etalt 9 

or “I don’t care a damn.” The movement was more- 
over a kind of haven for those thousands of men 
who found it so difficult to make a place for them- 
selves in the post-war world. 

Following his breach in November 1914 with the 
Socialist Party, Mussolini devoted all his energies 
to the cause of “intervention,” which to him meant 
not merely Italy’s abandonment of neutrality m the 
war, but also the starting point of a revolution 
which was to bring with it real freedom, freedom 
from the dictatorship “of tiara or sceptre, of sabre 
or capital, of label or mjrth.” He served with the 
army, was wounded, and after the war returned 
with, if possible, even greater fervor than before to 
his efforts to unite the masses of Italy in their strug- 
gle for a better future, even if as yet it was a future 
that was somewhat vague. The Popolo d’ltalia, the 
newspaper he founded in November 1914 after he 
was forced to resign the editorship of the Socialist 
Avanti, became the organ for his propaganda. Al- 
though he was no longer a member of the Socialist 
Party his paper continued to carry the subtitle, “A 
Socialist Daily,” a subtitle which was accompanied 
by two maxims: “Revolution is an idea which is 
based on bayonets” and “Who has steel has bread.” 
It was only after the war that the "Socialist Daily” 
subtitle was dropped, and replaced by “A daily of 
fighters and producers.” From the end of 1914 to 
the beginning of 1919 Mussolini was in the peculiar 
position of a leader with no organization to support 
him. He had a following, but this following had not 


yet gathered itself together and become a definite 
political movement. 

In Milan on March 23, 1919, Mussolini founded the 
Fasdo di Comhattimento. It had the same objec- 
tives as similar groups throughout the country. The 
gathering of March 23 was attended by probably not 
more than forty-five or fifty men in all, although 
larger figures are sometimes given. The new organi- 
zation had no definite program, except the one “in- 
herent in its name,” which meant the defense of 
the interests of the “proletariat of the trenches” and, 
again, the justifying of intervention. Until the be- 
ginning of 1921 the attitude of Mussolini and his 
organization was anything but reassuring to the 
interests of the property-owning class. With his 
struggle against Italian parliamentarism went most 
radical demands for economic and social changes. 
He advocated the transfer of land to the peasants, 
the introduction of the eight-hour day, the participa- 
tion of the workers in the management of industry, 
the nationalization of munition works, a heavy capi- 
tal levy, a crushing inheritance tax, the confiscation 
of 85 per cent of all war profits, and a merciless 
shooting of profiteers. This, of course, could hardly 
rally the bourgeoisie to his support. The Socialists 
never forgave him his “interventionist” attitude of 
1914r-1915 and his subsequent denunciation of their 
policies. The result was that when the Fascists de- 
cided to take part in the parliamentary elections of 
November 1919, the first elections held under Nitti’s 
new proportional representation law, they suffered 


a crushing defeat, polling merely a few thousand 
votes. The Socialists won a brilliant victory, and 
obtained 156 seats. There were many in those days 
who predicted the complete and final collapse of 
Fascism. The entire following of Mussolini was 
estimated at something under 20,000. 

He refused, however, to accept defeat. He threw 
all his indomitable energy into the struggle and 
events seemed to favor him. In a sense the very suc- 
cess of the Socialists worked against them, for it 
aroused the fears of the proprietor groups and the 
middle class. It was with much apprehension that 
they contemplated the possibility of a Government 
that might be a duplicate of Russian Boldievism. 
At the same time Socialist municipalities and insti- 
tutions of local government frequently practised 
petty t 3 n:annies of the most vexatious kind. The 
unions of agricultural workers were more aggressive 
than ever. In August and September 1920 a number 
of large industrial plants in the north of Italy were 
seized by the workers, and although the matter was 
in time settled peacefully, as a result of negotiations 
on the part of the Giohtti Government, fears of a 
repetition of such things remained. Indeed, the 
Government itself was suspected by many to be too 
much under the influence of radical elements. As for 
Mussolini and his Fascists the fact that they were 
fighting the Socialists, who were in a majority in 
Parliament and controlled much of the country’s ad- 
ministrative machinery, made many feel that his 
radicalism, after all, was not perhaps quite so dan- 


gerous as on the surface it might seem to be. His 
followers, gathering new recruits, fought under 
patriotic banners. Their slogan was ''Down with the 
red menace!" And they made their campaign 
against the Socialists a bitter one. In 1920-1922 
Italy was in a condition that closely resembled civil 
war. In various parts of the country open conflicts 
between Fascists and Socialists occurred almost 
daily, and were often accompanied by much blood- 
shed and destruction of property. The Fascists went 
to the length of destroying or burning down Socialist 
clubs, newspaper offices, cooperative society head- 
quarters and the like. Both police and Government 
maintained an almost hands-off attitude, which on 
more than one occasion seemed to favor the assail- 
ants. Eventually Giolitti, whose policy was one of 
expediency and the desire to remain in office, openly 
turned against his former Socialist allies and began 
actively to support the Fascists. In March 1921 he 
dissolved Parliament and there was a new election. 
In this, too, Mussolini’s program was largely di- 
rected against Bolshevism and proclaimed the neces- 
sity of saving the country from the horrors of class 
war~as preached by the Socialists. The radical 
economic and social demands of hiPl919 platform 
were kept much in the background. The Fascists 
also entered into a hloc with the Nationalists. It 
was successful. They won thirty-four seats while the 
Socialists lost the same number. Mussolini and his 
followers took their seats on the extreme right, and 
in his speech as leader of the group he declared that 


he was "reactionary because he was anti-parliamen- 
tarian, anti-democratic and anti-socialist.” 


It was an important victory for Fascism and it 
was followed by far-reaching changes in organiza- 
tion. Until the end of 1921 it had been a movement, 
not a party. This was considered by many of its 
leaders, including Dino Grandi and Italo Balbo, who 
is today Air Marshal of Italy and Governor of Libya, 
to be one of the essential conditions of success. 
Mussolini himself had earlier forcibly advanced the 
same view. The absence of any definite party name 
or party program was the living symbol of the sort 
of freedom, ultimate but not yet clearly seen, that 
he had so often extolled. And it had been feared 
that the formalization of the movement into a 
party might alienate many of its followers or even 
bring about its complete collapse. Nevertheless at 
a Congress in Rome on November 7, 1921, the 
foundation of a definite Fascist Party was decided 
upon. There were various reasons for this decision. 
A parliamentary group without a party behind it 
was an obvious anomaly. The local fasd were too 
much under the influence of their immediate leaders 
and could not always be counted upon for support. 
The transforming of the movement into a party 
would be a first step toward the creation of that 
reliable machine which was now considered essential 
if the future of Fascism was to be assured. Musso- . 


lini, it would seem, was also somewhat alarmed by 
the number and brutality of the acts of violence 
committed by his supporters, though it was violence 
that he himself had preached and encouraged. In 
August 1921 he even entered into an agreement with 
the Socialists and the Confederation of Labor de- 
signed to prevent future outbursts. This agreement 
was bitterly criticized within the Fascist Party, 
nearly wrecked it, and led Mussolini to offer his 
resignation. But it was not accepted and later the 
agreement was denounced by the Fascists. As for 
the organized party, however, it was clearly a more 
efficient instrument for keeping its members under 
control than was the loose and informal discipline 
which formerly prevailed among the scattered Fas- 
cist groups. 

At the Rome Congress the party program was 
duly accepted. In the traditional and involved Fas- 
cist phraseology it spoke of the Nation and the 
State, denounced Socialism, praised labor, and de- 
clared itself in favor of economic liberalism on the 
ground that the economic activities of a nation must 
not be handed over to the control of bureaucratic 
agencies. This certainly could not displease business, 
large or small, sorely tried as it had been by several 
years of Soci Jist experimentation. 

The Congress of Rome was attended by repre- 
sentatives of 2,200 /osci, groups that together num- 
bered a total of some 310,000 members. This was 
a considerable increase over the twenty fasd with 
17,000 members that were represented in 1919 at 



the Fascist Congress in Florence. But it was still 
merely a fraction of Italy’s 43 millions. Not that 
the relative insignificance of the number of his 
followers was anyUiing in itself to disturb Mussolini. 
The principle of hierardiy and leadership by an 
elite that would embody the highest aspirations of 
the Nation formed one of the fundamental ideas of 
Fascism. The important thing was to make this 
elite strong enough to impose its will upon the 
masses. The Party therefore proceeded to reorganize 
the fasci into more coherent elements, into forma- 
tions that were almost military and indeed much on 
the pattern of the Roman legions. Furthermore they 
now accepted the strictest discipline and gave their 
complete allegiance to the Party and the Duce. In 
a proclamation issued on November 21, 1921, the 
Party was literally described as a "voluntary militia 
placed at the service of the State,” a definition 
which was retained with some variations in the sub- 
sequent constitutions of the Party. The State it was 
prepared to serve, however, was not the parliamen- 
tary regime of the Pre-Fascist era. Bonomi, the new 
head of the Government, was under no iUuaons 
about that and he ordered the prefects both to take 
arms from those in possession of them, and to cancel 
all permits. But this order was never put into 
effect for the local authorities themselves were too 
deeply entangled in the Fascist movement. 

The next step in the consolidation of the Fascist 
advance to power was an attempt to capture the 
very stronghold of Socialism, the trade-union move- 


ment. In 1921 Fascist trade unions began to spring 
up aU over the country. They obtained a consider- 
able degree of success, especially among the poorer 
elements of the working people who frequently had 
to endure harsh treatment at the hands of their local 
labor bosses. 


The year 1922 saw the final stages of the collapse 
of the democratic regime and the steady taking over 
of the government, in the provinces, by the Fascist 
leaders. The absence of any parliamentary majority 
made the functioning of the representative govern- 
ment pure illusion. One political crisis followed an- 
other in an almost endless succession. They were 
finally resolved into mere shiftings of ministerial 
portfolios within the same small clique of profes- 
sional politicians. Central authority was made nil. 
Outside Rome the pressure of the Fascist organi- 
zations became greater day by day. Town after town 
and commune after commune passed under their 
control. In August 1922 they completely suppressed 
the Socialists in Milan and destroyed the plant of 
Avanti, the paper which had once had Mussolini for 
its editor. At almost the same time Genoa, once the 
stronghold of Socialism, was occupied by Fascist 
forces, and II Lavoro, another important Socialist 
publication, perished in the flames. A general strike 
which the Socialists had begun earlier in the sum- 
mer and which was the immediate cause of the 


Fascist invasion of Milan and Genoa collapsed mis- 

The situation was rapidly becoming intolerable. 
It was obvious that the Rome Government was 
being superseded by Fascism as the de facto ruler of 
the coimtry. It was merely a question of by what 
methods Fascism was to reach power. Some of its 
leaders favored legality and a peaceful penetration 
into the machinery of government. But others called 
for open insurrection, for the "March on Rome.” 
This was something that had been in the air ever 
since d’Annunzio had made his spectacular entry 
into Flume, and it made a strong appeal to the more 
exuberant element in the Party. Finally, too, pres- 
sure in favor of this means of bringing matters to a 
solution became irresistible, even though, as a con- 
sequence of the complete surrender of the Govern- 
ment and of the King, the culmination of the 
"March” proved to be a rather mild affair. 

The March on Rome was decided upon at the end 
of September 1922. On October 18 a special Quad- 
rumvirate was named to mobilize the forces of Fas- 
cism for the great event. On October 24 some 50,000 
black shirts gathered in Naples for a Party congress. 
Mussolini, so long an ardent republican, had now 
changed his attitude toward the throne. "I do not 
think,” he declared, "that the monarchy has really 
any object in opposing what must now be called 
‘the Fascist revolution.’ . . . The monarchy repre- 
sents the historical continuity of the Nation; a 
splendid function, and one of incalculable impor- 


tance.” This and similar statements were, no doubt, 
of great importance in shaping the events that fol- 
lowed. On October 28 the March on Rome began. 
A proclamation issued by the Fascists announced 
that it was not to be directed against the King, the 
army or the “productive elements” of the country, 
but solely against those who had betrayed it. As 
Mussolini put it, in his speech at Naples, “The 
C3hamber no longer represents the country, and 
every minister exercises his powers illegally. Our 
duty is to restore legality to the representative in- 
stitutions of Italy.” 

Luigi Facta, who headed the shadowy government 
then in office, decided to oppose the advance of the 
Fascists. A state of siege was declared but the order 
had to be countermanded for the King refused to 
sign the decree. While the black-shirted cohorts 
were closing in on Rome Mussolini was offered the 
opportunity to become part of a coalition govern- 
ment, but declined. On the 29th the King called him 
to Rome, and the next day, amid scenes of extraor- 
dinary enthusiasm, he formed a government. Then, 
on the 31st, he issued an order for the demobiliza- 
tion of his black shirts. Officially, but only officially, 
the revolution was over. Actually Italy was opening 
a new page in her history. 


“Democracy has destroyed the essential nature of 
the Italian people,” said Mussolini shortly before 


the March on Rome, “that is, not only the character 
but the color, the force, the picturesque, the unex- 
pected, the mystic, all in fact that lies deep in the 
soul of our people. But we shall restore it all. We 
shall play on every string from violence to religion, 
from art to politics. We are statesmen and we are 
warriors.” Yet the steps by which he proceeded to 
give reality to this vague program— if it can be 
called a program— were such as not many of his 
followers expected. 

In spite of his avowed aversion to parliamentar- 
ianism he began his official career as head of a coali- 
tion government. His first cabinet was largely drawn 
from political groups not belonging to the Fascist 
Party. He appeared before the two Houses of Par- 
liament, showed much deference to the Senate but 
gave rough handling to tlie Chamber of Deputies. 
However it accepted the scolding resignedly and 
obediently voted the measures that the Government 
demanded. The Duce had made it clear that they 
would be put into effect in any case. The main 
efforts of the new regime were now, and for the first 
two or Hiree years of its existence, devoted to con- 
solidating its position. This demanded, on the one 
hand, the strengthening of the machinery of the 
Party and, on the other, the removal from all 
offices, however humble, of every enemy of Fas- 

The membership of the Party was subjected to a 
close scrutiny and was drastically purged of unde- 
sirable elements. To determine what were the unde- 


sirable elements proved by no means an easy busi- 
ness. It was a difiBculty for which, in no small degree, 
the uncertainties in the Fascist doctrine were them- 
selves responsible. But ever since these periodical 
purges have continued to be one of the characteris- 
tics of Fascism. No less significant was the dissolu- 
tion of all individual Fascist fighting units by an 
order of the Grand Council of Fascism, issued Janu- 
ary 12, 1923. They were replaced by the Fascist 
Militia; and in July of the same year this Militia 
received its constitution. The Militia consisted of 
picked men and its chief business was declared to be' 
the defense of the regime and the preservation of 
public order. Organized on military lines, bound to- 
gether by a strict discipline, sworn to absolute obe- 
dience, and imbued with boundless and fanatical de- 
votion to the Duce this Militia has to this day been 
one of the mainstays of Fascist rule. 

It played no small part indeed in the accomplish- 
ing of Fascism’s second task, the reconstruction of 
the administrative machinery of the country and the 
removal from office of all those whose attachment to 
the new leader might be questioned. Various meth- 
ods of pressure were used to make former office- 
holders give place to men who were favored by the 
local Fascist powers. In a number of cases the 
municipal councils and other institutions of local 
government were merely put aside and replaced by 
commissioners appointed by royal decrees or by or- 
ders of the prefects. This process offered practically 
unbounded opportunities for abuses of the grossest 



nature, and for the strengthening of the local Fascist 
bosses, on whom the Government and the Party 
found it necessary to put a check in the reforms of 

In the meantime Mussolini continued to play the 
rather unexpected part of a constitutional prime 
minister, one, too, who had no assured majority in 
Parliament. In November 1922 wide emergency 
powers were granted to him by the legislature. The 
first important change in the constitution came with 
the Election Law of July 1923. It was duly voted by 
the Chamber when Mussolini plainly warned it that 
the fate of the parliamentary regime was in the bal- 
ance. This law provided that ihe political party 
which obtained the largest number of electoral votes 
should receive two-thirds of the seats, provided that 
it polled not less than 25 per cent of the total vote. 
The elections took place on April 6, 1924. A year 
earlier, in March 1923, the Nationalists had been 
absorbed in the Fascist Party and their candidates 
appeared in the same National or Fascist lists. Mus- 
solini issued definite orders to insure the fairness of 
the elections, but it is generally admitted that these 
orders were not really enforced. The Militia was 
mobilized on election day and intimidation and cor- 
rupt practices were widely resorted to. The Fascist 
list received 4.8 million votes. Next to them came 
the Socialists, but they had only one million. The 
other parties received considerably less. Mussolini, 
with 268 seats in the possession of his supporters 
might well have seemed to be in a position to cany 


through all the reforms he desired. Unexpectedly, 
however, the minority parties proved recalcitrant. 
When the new Parliament assembled, the opposition 
with vigor and vehemence assailed the Government’s 
conduct of the elections and its policies in general. 
Montecitorio again became the scene of violent 
recriminations which were reminiscent of pre-Fa^ist 
days. Prominent among the denouncers of Fascism 
was the Socialist deputy, Matteotti. On June 10, 
1924, he was murdered and a number of high Fascist 
dignitaries, belonging to the immediate entourage 
of Mussolini, were involved in the sinister affair. 
The murder and the revelations which followed pro- 
duced a tremendous sensation. There was general 
clamor from the opposition for the disbanding of the 
Militia, the restoration of proportional representa- 
tion and new elections. In the end the opposition 
even refused to continue to sit in the Chamber and 
left Montecitorio altogether. This won them the 
sobriquet of the “Aventino” Opposition, as was only 
natural in a country where classical traditions are 
still alive. Mussolini made several attempts at con- 
ciliation, but failed. A new wave of unrest was 
sweeping the country, with wild outbursts from both 
sides. At the end of 1924, exasperated by personal 
attacks, he saw that all hopes of reconciliation were 
out of the question. He declared open war on the 
“Aventino” and all other enemies of the regime. His 
official excuse for the drastic measures which fol- 
lowed was the same excuse he had used so often in 
the past, “the red menace.” The Chamber of Dep- 



uties, minus the opposition, continued to function 
and passed the bills introduced by the Government. 
When some of the “Aventino” members attempted 
to resume their seats they were not permitted to do 
so, and finally their mandates were declared 


A rapid succession of measures made a clean 
sweep of the civic liberties the Italians had enjoyed 
in the past. Freedom of the press, of speech, of 
meeting and assembly, was gone. Under the new 
laws any expression of opinion unfavorable to Fas- 
cism could be construed as a serious offense, subject 
to heavy penalties. Special courts were established 
to deal with offenses of this kind, and such courts 
were kept very busy. The entire machinery of the 
judiciary was put under the supervision of the exec- 
utive and lost its former independence. The power- 
ful Masonic lodges were closed. Political parties 
other than the Fascist disappeared. The totalitarian 
State was distinctly in the making. 

Far-reaching changes also took place in the local 
and central administration. The powers of the pre- 
fect were much extended. Elected mayors were re- 
placed by Podestd appointed by the Ministry of the 
Interior. These measures were directed not only 
against the enemies of Fascism but also against those 
local Fascist bosses who frequently had paid small 
heed to the wishes of the central government and 


the Party leaders. The elective provincial and mu- 
nicipal councils were abolished and replaced by ad- 
visory committees appointed by local interests under 
the supervision of the Party. Local autonomy, 
largely fictitious even in pre-Fascist days, was now 
replaced by a rigid centralization. 

The central government of the Kingdom suffered 
an even greater root and branch readjustment. By a 
law of December 24, 1924, the office of Capo del Gov- 
emo or Head of the Government was established. 
Appointed by the King, the Head of the Govern- 
ment was given unlimited power to determine the 
destinies of the country. The members of his cabinet 
occupied a very subordinate position. The Head of 
the Government was to “direct and coordinate” their 
work and settle any differences which may arise 
among them. It became, moreover, the Fascist 
practice to have from time to time a “changing of 
the guard,” when all or almost all the members of 
the cabinet would tender their resignations and be 
replaced by new men, for no special purpose except 
that of injecting new blood into the administrative 

Parliament, after its unexpected revolt that had 
precipitated the political crisis of 1924-1925, was 
naturally among the institutions which were to be 
completely remodelled. After much discussion the 
new law here called for was drafted by the Grand 
Council and, in 1928, obediently passed by the 
Chamber of Deputies. Under this legislation the 
Chamber now consists of four hundred members 


elected by the Grand Council of Fascism from one 
thousand names submitted to it by the confederar 
tions of mployers and employees, of which more 
will be said later, and by a number of other organi- 
zations. The Council has the right to add other 
“distinguished” names to the list, which is then sub- 
mitted to the electors. If the list obtains 50 pra: 
cent of the vote all those whose names are upon it 
are elected. There are provisions for the preparation 
of lists other than that of the Grand Council but 
these provisions are of purely academic interest. The 
confederations and other associations which submit 
names to the Grand Council for inclusion in the list 
of future deputies are all controlled by the Fascist 
Party. Under these conditions the character of the 
Chamber is a foregone conclusion. OflGicially, elec- 
tions are perfectly free and secret, but there seems 
to be much local pressure, and apprehension on the 
part of the voters that secrecy is not quite so com- 
.plete as might be desired. At the election of 1929 
8.5 million voted “Yes” imder the Fascist list and 
135,000 “No.” In 1934 10 million voted “Yes” and 
only 16,000 “No.” Great efforts have been made to 
triumph over the apathy of the electors, which is not 
difficult to understand with an electoral system like 
the one described above. This “parliament” can 
hardly be regarded as any genuine expression of the 
opinion of the country. But it serves the useful pur- 
pose of performing a certain amount of technical 
legislative work and also of keeping the Duce in 
direct contact if not with the opinion of the country 


at least with the opinion of the broader Fascist 

Mussolini has little liking for the legislative as- 
sembly which he himself installed at Montecitorio. 
Since the creation of “corporations,” which will be 
dealt with in a subsequent chapter, there has been 
much discussion of the necessity of abolishing the 
Chamber of Deputies altogether. “Running ahead of 
time some have already spoken of the end of the 
present Chamber of Deputies,” said Mussolini on 
November 14, 1933. “. . . The time will come when 
the Chamber of Deputies will have to decide its own 
fate. Are there any Fascists who feel inclined to 
weep at this possibility? If there are, let them know 
that we shall not dry their tears. It is quite conceiv- 
able that the National Council of Corporations will 
wholly replace the present Chamber. It has never 
been a thing that I liked. Its very name has become 
an anachronism. It is an institution which we in- 
herited, and which is alien to our mentality and to 
our Fascist passion. The Chamber presupposes that 
a world which we have demolished is still alive. It 
presupposes the plurality of parties and would mean 
frequent attacks upon the ministerial coach. Since 
the day on which we annulled this plurality the 
Chamber has lacked the fundamental reason for 
which it was established. . . . But all these are de- 
velopments for the future, and there is no undue 
haste.” There can be no doubt therefore as to the 
real intentions of the Duce with reference to the 
Chamber of Deputies. In the meantime it swells the 


list of places distributed by the Government and 
the Party to their deserving followers. 


The most striking constitutional innovation of the 
Fascist regime is the establishment of the Grand 
Council of Fascism as the central institution of the 
government. The Grand Council entered upon its 
career in January 1923 and was then merely a com- 
mittee of the leaders of the Fascist Party. In those 
days it concerned itself with Party policies and had 
no direct connection with affairs of state, although 
its powers were continuously expanding with the 
growth of the influence of the Party on the admin- 
istration of public business. It was the Grand Coun- 
cil that appointed the Commission on the Consti- 
tution which made the proposal for the legislative 
changes briefly discussed above. In 1926 the Fascist 
Party received its first formal constitution, and 
thereafter it became necessary to formalize its rela- 
tions with the constitutional machinery already in 
existence. By the Law of December 9, 1928, 
amended by the Law of December 14, 1929, the 
Grand Council of Fascism was accordingly made the 
central organ of the constitution of the State. It is, 
of course, like all other important institutions of the 
regime, under the complete and unlimited control 
of the Head of the Government. He is the Council’s 
chairman. The membership of the Council consists 
of the higher officials of the Party and of the State, 


such as members of the cabinet, the presidents of 
the Senate and the Chamber of Deputies, and also 
members appointed by the Head of the Govern- 

The functions of the Grand Council are of the ut- 
most importance. It must be consulted on all con- 
stitutional changes in contemplation — and the Law 
offers an exhaustive list of them. They cover changes 
in the order of succession to the throne. The Coun- 
cil also keeps a list of names of persons proposed by 
the Head of the Government, which list is to be sub- 
mitted to the King to guide him in appointing a suc- 
cessor to the Duce in case his office should become 
vacant; and it likewise keeps similar lists of candi- 
dates for other high offices, which are to be sent to 
the King in case of an emergency, though the nor- 
mal exercise of this function is one of the preroga- 
tives of the Head of the Government. The Grand 
Council is linked with all the central institutions of 
the State and of the Party. It controls them all and 
is the living g3nnbol of that totalitarian idea of tiie 
Fascist State which makes the Party the dominating 
element in the life of the State. The constitution of 
the Fascist Party is subject to Royal approval on 
the recommendation of the Head of the Govern- 
ment. The Secretary of the Party is appointed by 
the King at the request of the Duce. The Commis- 
sion of the Chamber which reported on the Law was 
perfectly justified therefore in stating that “the 
Party . . . becomes completely an organ of the 
State.” In accordance with the language of its Sta- 


tutes the Fascist Party is a “civil Militia, at the or- 
ders of the Duce, at the service of the Fascist State.” 
The State and the Party are thus inextricably bound 
together, and the Duce who heads both is supreme. 
Nominally the Crown is still the highest authority. 
But the King is hardly more than a prisoner in the 
Quirinal. Any independent political action on his 
part is entirely outside the realm of possibility. As 
a tangible embodiment of Italy’s historical tradition 
he is a useful attribute and one that enhances the 
prestige of the Fascist regime. The Crown was led 
to accept its present position by the events that fol- 
lowed the fateful decision of the King on October 
29. It is possible, too, that the acceptance of the 
inevitable was made more palatable not only by 
those marks of external respect which are forthcom- 
ing today from quarters where, before 1922, they 
were altogether lacking, but also by the realization 
that if it were not for the Fascist regime the mon- 
archy in Italy might well by now be a thing of the 



The Germany that gave birth to the National 
Socialist movement was no less racked and harassed 
than the Italy of 1919-1922. Indeed its position was 
even grimmer. No political regime ever began under 
worse auguries than the ill-fated Weimar Republic. 
Looking back at the recent history of Germany one 
feels that even under the most favorable conditions 
the chances of a democratic form of government tak- 
ing firm root in the soil of the former German Em- 
pire would not have been too bright. Prussia’s long 
domination over the Reich had left upon it an im- 
print that neither the defeat of 1918 nor the thirteen 
years of republican administration that followed 
were able to efface. The institutions of democracy, 
like any other human institutions, cannot be trans- 
planted forcibly into a soil that is alien and in which 
aU the elements needed for their growth and devel- 
opment are wholly lacking. The new-born German 
Republic, moreover, had to assume from its very 
first steps an utterly intolerable burden. A govern- 
ment consisting of men with little or no experience 
in public oflSce was confronted with problems which 
would have taxed to the very limit the ingenuity of 



the shrewdest statesmen. In 1918-1919 the country 
was in the depths of despair. Military defeat, it will 
be remembered, descended upon Germany as crush- 
ingly as it was unexpected. For over four years the 
army and the civilian population had endured al- 
most superhuman hardships in a struggle for what 
they believed to be a just cause. Cut off from the 
rest of the world by the iron ring of the naval block- 
ade, Germany had been reduced to depend solely on 
the resources of herself and those of her three Allies; 
and they largely depended on her for military and 
technical equipment. She had put all her organizing 
genius and all her capacity to resist into the service 
of the great national cause, that of winning the war. 
And then had come the complete collapse. It was 
really more than a military defeat. It was the crum- 
bling of an entire world. Hie destruction of tradi- 
tional spiritual values which left behind them a vac- 
uum that has perhaps not yet been filled. All the 
sacrifices of the past had proved to be in vain. The 
present was bleak, the future so forbidding that one 
hardly dared face it. 

The spiritual crisis that Germany lived through, 
then, had a fitting counterpart in her complete eco- 
nomic prostration. The accumulated wealth of the 
country had gone to the financing of the war. Gone 
were some of her most important industrial regions 
such as Alsace-Lorraine, the Saar, and parts of Upper 
Silesia. Old industrial ties had been ruthlessly 
severed. Both agriculture and industry were disor- 
ganized and found it difiBcult to adjust themselves 


to the new world which emerged from the war. Tariff 
barriers and trade restrictions were rising menac- 
ingly in every part of Central Europe and made 
necessary the drastic revision of the old-established 
trade routes. The depreciation of the mark was the 
forerunner of inflation which was to reach its zenith 
in 1923. It brought in its wake the financial collapse 
of Germany’s middle class, the ruin of people with 
fixed incomes, and offered at the same time almost 
unlimited opportunities for the accumulation of 
large fortunes by unscrupulous speculators. These 
nouveaux riches complacently and ostentatiously 
displayed their wealth, and this made keener the 
misery of their fellow citizens who had lost their 
modest all in the catastrophe that had overtaken the 
Nation. Seldom can contrasts between poverty and 
wealth have been greater. Seldom can the popular 
tion of an advanced industrial country have been re- 
duced to such misery. Hundreds of thousands of 
men demobilized from the army were returning with 
hearts heavy with bitterness to their chill and dark- 
ened homes, with little hope of finding work and 
making a living. 

The ground for the spreading of the most radical 
doctrine was all prepared. Across the eastern 
frontier, over the head of Poland, came the passion- 
ate appeals of Lenin, Trotsky and Zinoviev who 
called for the immediate establishment of the dic- 
tatorship of the proletariat. And those were days 
when the thing appeared to be by no means impos- 
sible. The Spartakus uprising took place in Berlin 


in 1919 and was followed by similar bloody out- 
bursts in other parts of the country. Hungary was 
already under the rule of Bela Kun, and a Soviet 
revolution had flared up in Munich. Men and 
women who had lost all faith in an existing order 
that had brought to them such untold misery were 
rapidly swelling the membership of the Communist 

The worst thing, however, that had been laid 
upon the new German Republican Government was 
the compulsion it was under to put its agnature to 
the Treaty of Versailles. The result was that almost 
from the first Das System, as the Weimar Republic 
was soon to be called by her opponents, was tainted 
with the disgrace of having accepted the hated Dik- 
tat which saddled Germany with the responsibility 
for the war and compelled her to force its penalties 
upon an unwilling German people. The truly re- 
markable thing about the Versailles Treaty is not its 
failure to embody the highest principles of equity, 
but the fact that any agreement at all could have 
been reached by the victorious Powers in the atmos- 
phere of unreality and fantastic delusions that pre- 
vailed in 1919.^ The provisions of the Treaty that 
proved particularly poisonous from the point of view 
of international relations were those which, in their 
very nature, prevented the German wounds from 
healing. Such were the articles that called for the 
occupation of the western side of the Rhine by Allied 

^ At the Ver^illes Conference, for instance, Germany’s capacity 
to pay was estimated by one learned British "expert” at 480 bil- 
lion gold marks, and hy a French “expert” at 800 billion! 


troops for fifteen j'ears, the demilitarization of the 
left bank of the Rhine (a provision which is still in 
effect and is bound, sooner or later, to become the 
source of international complications), the limita- 
tion of German armament repudiated by Hitler in 
March 1935, and, above all, the reparation pay- 
ments. The latter question was left open by the 
Treaty and was to be settled by the Reparation 
Commission. This led to endless and most vexatious 
negotiations between the Allies and Germany — 
negotiations which brought with them the occupa- 
tion of the Ruhr by the French and Belgians in 
1923 — and a number of shadowy settlement schemes 
all of which, with the exception of the Dawes Plan,’ 
ended in failure. The acceptance of each of these 
schemes by the Reich was accompanied by much 
international bitterness, by much pressure upon 
Germany on the part of the Allies and by new waves 
of indignation and criticism in Germany herself; 
and such feelings vented themselves not only against 
the former enemy Powers but also against the home 
government, because it had been unable to save the 
country from “economic slavery.” The policy of 
“fulfillment” of the Treaty was one of the chief 
arguments used against the System by its oppo- 
nents. The administration of reparations and other 
provisions of the Treaty, moreover, necessitated the 
establishment at different times of agencies of Allied 

* The privileged position of the Dawes Plan was due merely 
to the fact that it was “provisional”; it was duly replaced in 1929 
by the Young Plan, which was described as the “final settlement.” 
It collapsed a year later. 


control for the supervision of the economic life of 
Germany. The activities and the very presence on 
German soil of such bodies was naturally much 
resented. The cumulative effect of the Allied policy 
toward Germany following the war was to weaken 
the position of Germany’s new and democratic Gov- 
ernment by making it, in the opinion of many Ger- 
mans, a reluctant, but nevertheless obedient, tool 
for the achievement of Allied aims. This was cer- 
tainly a vital factor in stimulating the growth of 
that aggressive and militant nationalism which is 
the backbone of the Hitler movement. 

It is true that the Allies from time to time made 
important concessions. Some of the provisions of 
the Treaty were never enforced and were permitted 
to lapse. The western side ojf the Rhine was evacu- 
ated in 1930, five years before the expiration of the 
prescribed time. Reparations themselves were writ- 
ten off for all practical purposes at Lausanne in 1932, 
although legally they could still be revived. Germany 
however refused to look upon these concessions as 
friendly gestures or the abandonment of rightful 
claims, for she had never accepted the Versailles 
Treaty as a just and equitable peace. The Repub- 
lican Government therefore got little or no credit for 
what it might well consider to be substantial diplo- 
matic victories. As time went on, instead of gaining 
ground it grew steadily weaker. 

This weakness, of course, was by no means en- 
tirely due to the policy of the Allies. There was a 
sharp cleavage between the German Social Demo- 


cratic Party and the German Communist Party. The 
latter was entirely under the dominance of the Third 
International which, in those days, considered the 
Social Democrats as among its worse enemies. Look- 
ing for support, the German Social Democrats re- 
tained the officer corps of the former imperial army 
as an organizing cadre for the Reichswehr. 
They also retained the old judiciary and much of 
the former civil service, including the diplomatic 
corps. None of these elements had ever been com- 
pletely reconciled to the Republic, and they were 
certainly not hostile to the possibility of a change in 
the form of government. The Social Democrats did 
practically nothing to break the power of the indus- 
trial magnates and the landed aristocracy. Article 
155 (ii) of the Weimar Constitution which envis- 
aged the possibility of expropriation of land for the 
needs of internal colonization was never put into 
practice. On the contrary, owners of large estates 
were generously supported by the Republican Gov- 
ernment which bestowed large subsidies on them. 
All things considered, in spite of the fall of the 
monarchy and the growth of Communism, the social 
structure of Germany under the Weimar Republic 
was not substantially different from what it was 
before the Revolution. It must also be admitted 
that the democratic system never worked satisfac- 
torily. Between February 1919 and January 1933 
Germany had 21 cabinets headed by 12 chancellors. 
Not less than 38 parties participated in the elections 
to the Reichstag in 1932. 



To understand the rise of the Hitler movement it 
is important to keep this political and economic 
background in mind. As for its beginnings they were 
even more humble than those of Italian Fascism. As 
we have seen, even before the war Mussolini was a 
leader with a national reputation, and the fasci had 
spontaneously organized all over the country. Adolf 
Hitler was, in 1919, a man entirely unknown, an 
Austrian German who had first come to Germany in 
1912. During the war he fought in the German 
army. He had been wounded and gassed, and had 
won the Iron Cross. Until 1920 he had continued 
to serve in the army, holding the rank of corporal 
(Gefreite). He had no following of any kind. In 
1919 he was invited to a meeting of the German 
Workers Party (Deutsche Arbeiterpartei) which had 
been founded in January of the same year by a lock- 
smith, Anton Drexler. The party was not really a 
party at all, but merely a small group of men united 
by their refusal to accept the “betrayal” of the army 
which they felt had been “stabbed in the back.” It 
was a group which at that time numbered twenty- 
eight members. But only six of them were active, 
and when Hitler joined the organization in July 
1919 he received membership card No. 7. A little 
later the German Workers Party added to its name 
and became the National Socialist German Workers 
Party (Nationalsozialistische Deutsche Arheiter- 
partei). On August 1, 1921, Hitler was elected its 


leader. A year before, on February 24, 1920, the 
Party had adopted an ofl5cial program which had 
been drafted by Gottfried Feder, an engineer, the 
effect of whose writmgs on Hitler’s own outlook he 
gratefully acknowledges in Me^r^ Kampj. This pro- 
gram, which was expounded in twenty-five para- 
graphs, was clothed in language rather ambiguous 
and obscure. It contained some very radical de- 
mands, such as the abolition of all unearned incomes 
and the "slavery of interest" (Brechung der Zins- 
knechtschaft) , the confiscation of war profits, the nar- 
tionalization of trusts, profit-sharing in large con- 
cerns, an expansion of the old-age pension system, 
public ownership of department stores, the expro- 
priation of land for public purposes, the elimination 
of land rent, the prevention of land speculation, and 
free primary education. The program, moreover, de- 
manded the cancellation of the Treaty of Versailles, 
and developed the idea of "Germany for the Ger- 
mans” by calling for a policy of treating as for- 
eigners all those who were not of German blood. "No 
Jews therefore can be members of the Nation.” All 
such persons were to be deprived of the right to hold 
any public office, own newspapers or engage in jour- 
nalistic work. All non-Germans who had entered the 
country since August 2, 1914, were to be deported. 
The program also proclaimed the principle of “the 
interests of all before the interests of one” {Gemem- 
nutz vor Eigennutz) and advocated a strong central 
government with absolute authority over the entire 
Reich and all its organizations. The preamble to the 


program said that this was a “time program” (Zeit’- 
Program). By a decision of the Party on May 22, 
1926, it was nevertheless declared to be “unchange- 
able,” which, however, was officially stated to mean 
that “the fundamental principles and the funda- 
mental ideas of this program cannot be altered,” but 
that the methods by which it was to be carried out 
were to be adapted to changing conditions. That 
some of the most fundamental principles of Na- 
tional Socialism were open to more than one inter- 
pretation appears from the important official state- 
ment issued by Hitler on April 13, 1928. Here he 
pointed out that the Party bases its policy on the 
right of private property, and that the expression 
“expropriation of land without compensation” ap- 
plied only to land unlawfully acquired or not used 
in the public interest. ‘Tt is therefore primarily 
directed against Jewish speculators in land.” This 
elucidation of the real meaning of “expropriation of 
land without compensation” undoubtedly went a 
long way toward reconciling landed proprietors to 
National Socialism. 

The following of the National Socialist Party in 
its early days was largely drawn from various pri- 
vate military organizations {Freikorps) which were 
numerous in Germany after the war. Captain Ernest 
Rohm, who lost his life in the bloody “purge” of 
June 30, 1934, was among the army officers who 
joined the Party in 1919 and was largely instru- 
mental in recruiting men for the S. A. (Sturm Ab~ 
teilung) which became the counterpart of the Fas- 


cist Militia. What attracted these young men to 
National Socialism was not so much its official pro- 
gram as its militant spirit, its hatred of the Ver- 
sailles Treaty and of anyone associated with it, its 
quasi-military organization, and the opportunities to 
fight those whom they believed to be the enemies of 
“true Germany.” These were in particular the 
“Marxist-Liberal State,” the Conununists and the 
Jews. For anti-Semitism has been from the very 
beginning one of the outstanding features of the 
Hitler movement. 

Although National Socialism was increasing its 
membership, the increase in the early years was not 
spectacular. Only six thousand S. A. men were pres- 
ent at the first Party Congress {Parteitag) in Janu- 
ary 1923. In November 1923 Hitler participated, 
with General Ludendorff, in the abortive Putsch in 
Munich, the failure of which is ascribed by the Na- 
tional Socialist commentators to the betrayal by one 
of the leaders of the uprising, von Kahr. Hitler was 
arrested, tried and sentenced to five years in prison. 
It was during his confinement in Landsberg that he 
wrote Mein Kampf. Many of Hitler’s lieutenants 
were also behind the bars. The Party was virtually 
outlawed. It might well have seemed that National 
Socialism had been wiped out of existence. 


But this was not the case. On March 4, 1924, the 
remnants of the Party, in a bloc with the German 


People’s Party {Deutschvdlkische Partei) par- 
ticipated in the Reichstag elections and obtained 
thirty-two seats. At the time the trial of Hitler was 
taking place and as it was being given much pub- 
licity this probably had something to do with the 
bioc’s comparative success. On December 20, 1924, 
Hitler was released and he immediately proceeded 
to reorganize the Party. In February 1925 the 
Volkische Beohachter, the Party organ, the publica- 
tion of which had been suspended since the Munich 
affair, again began to appear, and the remaining 
members of the movement, so lately scattered, reas- 
sembled under the swastika banner and reaffirmed 
their confidence in their leader. In the years that 
followed, the growth of the movement was slow. In 
the Reichstag elections of May 20, 1928, the National 
Socialists obtained only 800,000 votes, but they won 
twelve seats, an increase of eight over what they had 
held before. Their former ally, the German People’s 
Party, was practically wiped out of existence. In 
1929 the National Socialist Party combined with the 
German Nationalist Party (Deutschnationale Volks- 
pai'tei) in an attempt to block the adoption of the 
Young Plan. They succeeded in forcing a referen- 
dum but only 6.8 million ballots were cast. The 
major parties refrained from voting, and the pro- 
posed rejection of the Young Plan was defeated. It 
was, however. National Socialism’s last important 
setback. The tide was turning in its favor with a 
rapidity which the earlier slowness of its rise did not 
seem to forecast. 


In the Reichstag election of September 1930 the 
Hitler movement obtained 6.5 million votes and 107 
seats. There was great elation among the members 
and open talk of a “March on Berlin.” In the presi- 
dential elections in the spring of 1932 Hitler was 
defeated by von Hindenburg but obtained 11.3 mil- 
lion votes on the first ballot and 13.4 million votes 
on the second. From the election of July 1932 the 
National Socialists emerged as the strongest party in 
the Reichstag. They had won 230 seats and polled 
a total vote of 13.7 millions. The Social Democrats 
trailed far behind with 133 seats. The dissolution of 
the Reichstag by von Papen was followed in No- 
vember by a new election which registered a setback 
for National Socialism. The movement got 11.7 mil- 
lion votes and only 196 seats, while the representar 
tion of the Communists was somewhat increased. 
There was much speculation as to the “inevitable” 
decline of the Hitler movement, although the rapid 
winning over of the institutions of local government 
by the National Socialists and their increasing 
strength in the legislatures of the various States 
gave little ground for such conjectures. Within the 
movement there was some criticism of the leader’s 
tactics. In October 1931 Hitler and Goring were 
consulted by Hindenburg, but nothing came of it. 
Hitler was ^ain called in by Hindenburg in Novem- 
ber 1932, but refused to participate in a coalition 
government which he was not to head. It was gen- 
erally believed that he had missed his chance and 
that a movement which preached direct action but 


in practice limited itself to street-corner fisticuffs 
with the Communists was bound to disintegrate. But 
on January 30 Hindenburg once more called Hitler 
in and this time the Fiihrer emerged from the presi- 
dential palace as Chancellor of the German Reich 
and head of a coalition government composed of 
National Socialists, Nationalists and conservative- 
minded men, some of whom had served in the von 
Papen and von Schleicher cabinets. 

The sudden turn in the fortunes of National 
Socialism between 1928 and 1930, when its Reich- 
stag vote increased from 800,000 to 6.5 millions and 
its almost uninterrupted progress thereafter calls for 
closer study. National Socialist writers, I think, 
rightly emphasize the parallel between the growth 
of the Party and the growth of unemplo 3 anent. In 
the large cities 60 or 70 per cent of the membership 
of the S. A. is said to have consisted of the unem- 
ployed. So long as economic conditions were im- 
proving and recovery was being stimulated by a 
generous current of gold which, in the form of loans, 
continued to turn the wheels of industry faster and 
faster, the Hitler movement made little headway. 
But the collapse of the mechanism for international 
loans and the decline in international trade, to say 
nothing of all the other concomitants of depression, 
brought in their wake a most rapid increase in the 
number of unemployed who, by January 1933, num- 
bered more than six million. The deflationary pol- 
icies of Briining contributed to the increase of the 
national burden, and their effects were particularly 


felt by the lower middle class among whom Hitler 
found the main body of his supporters. 

We must also remember that National Socialism 
had always claimed to be a movement of the young; 
and, by 1930, the children of the war years had 
grown to manhood. They had grown up, too, at a 
time when the country, as wc have seen, was passing 
through a period of extremely painful readjustment. 
They had lived through many hardships. They 
could see no justice in international financial ar- 
rangements, such as the Young Plan, that were to 
lay upon their country a heavy financial burden that 
was to last for three generations, as a penalty for a 
war in which these generations had had no part. 
They were losing faith in a social and economic sys- 
tem that resulted in poverty in the midst of plenty, 
and they were not resigned to accepting without a 
struggle a future that had nothing in store for them 
except unemployment. The militant character of 
the Hitler movement, its thrills and novelty, its uni- 
forms, fist fights with the police and Communists, 
and all of its heroic trappings and phraseology ap- 
pealed irresistibly to the romantic element in the 
German character. From the drab world of daily 
drudgery and waiting lines at the doors of employ- 
ment offices. National Socialism was taking its 
youthful followers to that exalted realm where sacri- 
fice for a great national cause was ardently preached 
in a language which, if perhaps not always clear or 
logical, succeeded in touching some deep inner 
chords of the human heart. The mixture of bru- 


tality, racial pride, anti-Semitism, vague radicalism, 
romanticism and sentimentality proved to be exactly 
the concoction the young Germany of the post-war 
period was longing for. The greatly improved organ- 
ization of the Party and its untiring efforts to propa- 
gandize undoubtedly had much to do with the suc- 
cess of the movement in the later years. And of 
course it would be idle to deny that the personality 
of Hitler — like that of Mussolini — ^his passionate 
outbursts, his pugnacious and often savage oratory, 
played a very important part in this success. In con- 
trast with the venerable and rapidly ageing Hinden- 
burg and the mediocrity of the leaders of the 
Weimar Republic Hitler appeared to many to be 
the Man of Destiny. And in a country which is only 
waiting for its deliverer, a legend grows with 
remarkable speed. 

As time went on the attitude of the proprietor 
class toward the movement also became more favor- 
able, and not infrequently one of direct support. 
They liked Hitler’s aggressive nationalism and, as 
has been said, they were no longer afraid of his 
radicalism, especially after he had issued his ex- 
planation of the actual meaning of the demand for 
“the expropriation of land without compensation.” 
The social welfare schemes of the Social Democrats 
had been costly. The government machinery obvi- 
ously needed overhauling. “Something must be 
done.” The Hitler movement seemed to be the only 
alternative, especially if its radicalism could be 
further tempered by the presence in the Govern- 



ment of such trusted persons as von Papen, Hugen- 
berg and others. 

Again the unquestionable decay of the machinery 
of democratic government should not be overlooked. 
Hindenburg was clearly showing the effects of old 
age and had more and more become a figurehead 
and essentially a tool for the members of a small 
inner circle. They surrounded the President in Wil- 
helmstrasse and followed him to his country estate 
at Neudeck. The von Papen and von Schleicher 
cabinets which, after the abrupt dismissal of Brun- 
ing in May 1932, followed in rapid succession, were 
of dubious constitutionality. Thirteen years of the 
Republican regime had strangely failed to produce 
any outstanding statesman from democratic or 
Socialist circles. But the military tradition of Prussia 
was still alive. And as the towering figure of the 
Fieldmarshal gradually faded away and lost its 
glamour, the even more formidable figure of the 
Corporal assumed almost unbelievable proportions 
and overshadowed Germany’s whole political hori- 


The appointment of Hitler to the oflBce of Reich 
Chancellor was accompanied by manifestations of 
enthusiasm similar to those which took place in 
Rome on October 30, 1922, when Mussolini became 
the Prime Minister of Italy. Endless columns of the 
S. A. andS. S. (Schutz-Stauffel) men, of the National- 


ist Stahlhelm, of organizations of young people, and 
of many other bodies, singing now the “Horst Wessel” 
song and now the national anthem, moved from 
every section of Berlin toward the Wilhelmstrasse, 
where they marched past the new Chancellor and 
President Hindenburg. And in every other part of 
Germany like manifestations were taking place. 

On the surface Hitler’s first cabinet appeared to 
be rather mild and non-revolutionaiy. It included, 
in addition to the Chancellor, only two National 
Socialists: Prick and Goring. Von Papen was Vice 
Chancellor and Commissar for Prussia. Hugenberg 
represented the Nationalists, Seldte, the Stahlhelm, 
conservative organization of ex-service men. Von 
Neurath and Count Schwerin von Krosigk were re- 
tained from the cabinets of von Papen and von 
Schleicher. The Reichswehr was put under the com- 
mand of General von Blomberg. The National 
Socialist State would still seem to be something for 
the distant future. This was the opinion of many 
observers who seemed to have overlooked the fact 
that Hitler could depend on his political machine, 
and it had already spread the network of its organi- 
zations over the entire country. Moreover Prick, as 
Minister of the Interior of the Reich, and Goring, 
as Minister of the Interior for Prussia, had under 
their command all the police force. 

The new Government dissolved the Reichstag and 
new elections took place on March 6, 1933. But in 
the meantime, on Pebruary 27, the building of the 
Reichstag was found to be a&e. The alleged in- 


cendiary, a Dutch Communist van der Lubbe, was 
said to have been caught by the police just as he 
was about to leave the building. The extraordinary 
occurrence was declared to have been the signal for 
a general Communist uprising, an explanation which 
no one outside Germany has found it possible to 
believe. The unfortunate van der Lubbe “con- 
fessed,” was tried, and received the death penalty. 
And this Reichstag fire was used as a pretext for 
drastic repressions of both “Marxists” and the Com- 
munists. On February 28 the President issued a de- 
cree suspending the provisions of the Constitution 
that guaranteed freedom of speech, of the press, of 
assembly and the like. The police received prac- 
tically unlimited powers to deal with offenders 
against public order and security, and it was in this 
atmosphere of extreme tension that the elections to 
the Reichstag took place. The National Socialists 
obtained 17.3 million votes and 288 seats, and their 
Nationalist allies, 3.1 million votes and 52 seats. The 
Social Democrats retained their former total of 120 
seats and the Communists won 81 seats, or nineteen 
less than they had had in the Reichstag of Novem- 
ber 1932. The Government was now assured of a 52 
per cent majority. The chief issue in the election 
campaign was the “Enabling Act,” and it was duly 
passed on March 24 by the votes of all parties except 
the Social Democrats. The Communist and some 
Social Democrat deputies were either in hiding or 
in prison and did not take part in the proceedings. 
The Enabling Act, which was officially known as “A 

THE ECLIPSE OF democeacy; germaett 49 

Law to Combat the Misery of the People and of the 
Keich/’ vested in the Government practically im- 
limited powers for the period of four years. The only 
restriction on its right to legislate by decrees was a 
stipulation that no constitutional changes could be 
made which would affect the position of the Reich- 
stag and the Reichsrat (representing the States). 
This restriction was in its turn removed by a Law of 
January 30, 1934. 

The Government wasted no time in making full 
use of such power. The Law of April 7, 1933, pro- 
vided for the “restoration” of the civD service. By 
virtue of the law government employees could be re- 
moved on the ground that they were “inimical to 
the State” or “politically undesirable.” The Law 
also contained the Aryan clause which demanded the 
exclusion from the civil service of all employees of 
non-German blood. The drastic purge that followed 
resulted in the removal of a large number of civil 
servants and, with them, judges whose devotion to 
National Socialism seemed to be in doubt. A new 
People’s Court, established by a Law of April 24, 
1934, was framed in such a way as to place another 
convenient tool in Government hands. The press, 
radio, theater and moving pictures were put under 
the complete control of the Minister of Enhghten- 
ment and Propaganda, Dr. Goebbels. The univer- 
sities and schools were similarly handed over to the 
care of the Minister of Education, Dr. Rust. 

Between March and July 1933 all the other poli- 
tical parties in the Reich passed away. The Com- 


munists and the Social Democratic Parties were dis- 
banded and the others went into “voluntary” 
liquidation. A Law of July 14, 1933, proclaimed that 
the National Socialist Party was the only one in the 
Reich and made it a criminal offense to attempt to 
establish a new party. A short time before, on May 
2, the trade unions which had once been pillars of 
the Social Democratic Party were taken over by the 
National Socialists. Their leaders were arrested and 
their newspapers, offices, etc., passed into the hands 
of the new masters. 

The Reichstag was dissolved and new elections 
took place on November 12. The same day saw a 
referendum on the Government’s policy of with- 
drawing from the League of Nations and the Dis- 
armament Conference. The National Socialist list — 
which was the only one — obtained the endorsement 
of 40.6 million voters, or 92 per cent of the total 
vote, and the foreign policy of the Government 
polled 39.6 million votes. The interpreting of these 
huge figures, of course, should be done with much 
caution, but it cannot reasonably be doubted that 
the Government was not lacking in support. By a 
Law of December 1, 1933, the National Socialist 
Party was officially incorporated in the machinery 
of the State. 

Even more drastic perhaps were the measures de- 
signed to give political imity to the Reich and abol- 
ish the federal system. Already previous to the pass- 
ing of the Enabling Law, or between March 6 and 
16, 1933, each of the States of the Reich was put 


under a Reichskommissar. By a Law of April 7, 1933, 
the duties of every Reichskommissar were taken 
over by a Statthalter, who was a personal repre- 
sentative of Hitler and appointed on his recom- 
mendation, by the President. A Statthalter is also 
vested with practically dictatorial powers. 

The Law of January 30, 1934, dealt the last blow 
to local autonomy. The sovereign rights of the 
States were transferred to the Reich and the state 
governments were subordinated to the Government 
of the Reich. The Reich Minister of the Interior was 
to administer them through the particular Statt- 
halter in authority. Although the state governments 
continued to exist their autonomy was completely 
gone. The logical next step was (by a law of Febru- 
ary 14, 1934) to abolish the Reichsrat, which, to re- 
peat, was made up of the representatives of the 
States. All these measures, however, are considered 
to be only provisional, and the final constitution of 
the centralized and unified Germany is still in 
process of preparation. 

An important element in local administration is 
the holding of the office of Statthalter and that of 
Gauleiter by the same person. The National Social- 
ist Party has divided the whole country into terri- 
torial units known as Gaue, and the Gauleiter is the 
chief officer of the Gau. The personal union of the 
office of Statthalter and Gauleiter established a di- 
rect link between the local administration and the 
Party. In Germany, as in Italy, the Party com- 
pletely controls the entire administrative and poli- 


tical structure. “The National Socialist movement,” 
Hitler declared at Nuremberg in September 1933, “is 
the German Reich. It is the State.” The Law of 
January 30, 1935, on the government of the com- 
munes {Gemeindeordnung) embodied this principle. 
It provided that the mayor and his adjutant must 
enjoy the confidence of the Party and of the State 
{werden durch das Vertrauen von Partei und Stoat 
in ihr Amt berufen) and made it their duty to keep 
in close touch with the local representative of the 

The supreme executive and legislative power in 
this coordinated and unified Germany is concen- 
trated in the hands of Adolf Hitler, Chancellor of 
the Reich and leader of the National Socialist Party. 
On August 2, 1934, on the death of Hindenberg, he 
also became President of the Reich; this office was 
conferred upon him by a law issued by the Govern- 
ment of which he was himself the head. The deci- 
sion, however, was submitted on August 19 to a ref- 
erendum in which 39 million voted for Hitler and 
4 million against him. Following as it did upon the 
tragic and bloody events of June 30, when von 
Schleicher, his wife, Rohm, a number of S. A. leaders 
and many others lost their lives, and upon the mur- 
der of DoUfuss in July, this expression of confidence 
in Hitler was certainly not lacking in impressive- 
ness, even if full allowance is made for possibilities 
of direct and indirect pressure inherent in such 
plebiscites. The Weimar Constitution, of which the 
liberal Germans used to be so proud, has not as yet 


been ofiBciaJly discarded, but it certainly has been 
put to a use which its framers could never have fore- 
seen. Amid the ruins of the Weimar structure the 
Chancellor and Fiihrer, as Hitler continues to be 
called, is both in law and in fact just as much the 
supreme and undisputed master of Germany as 
Mussolini, a nominal appointee of the King, is the 
supreme and undisputed master of Italy. 


Fascism and National Socialism both aspire to the 
honor of having accomplished a revolution. The 
validity of this claim has sometimes been questioned. 
It is pointed out that, among other things, they 
reached power and made their constitutional changes 
by legal or quasi-legal means, although no one has 
denied that without the organized armed force at 
their disposal their aims could not have been 
achieved. The substitution, for a parliamentary 
monarchy and a democratic republic, of a personal 
dictatorship based on a party machine controlling 
the entire State administration may on good grounds 
be held to constitute a revolution. The change in 
the form of government was accompanied by much 
violence and brutality, by the forcible annihilation of 
the opposition, and by the removal from office of a 
number of officials. In this respect, however, both 
Italy and Germany fall short of the classic example 
set by the Russian Revolution. As an astute observer 


living in Berlin remarked to me, one could hardly 
speak of a real German revolution in the case of a 
change in the form of government where the new- 
comers retain in their service practically the entire 
police force of Prussia. After three years of National 
Socialist rule von Papen, von Neurath and Count 
Schwerin von Krosigk are still among the councillors 
of the regime, and Dr. Schacht is more powerful 
than ever. From this point of view the situation in 
Italy is very similar. Even more significant perhaps 
is the retention of the general social structure which 
existed before Fascism and National Socialism came 
into power. Although, as will later be shown, the 
control of the State over finance, industry and the 
landlords has been drastically extended, there has 
been so far no sharp and definite breach with the 
past. Private ownership as the basis of the total- 
itarian State has proved to be more than an empty 
phrase. Neither Italy nor Germany has as yet ex- 
perienced the colossal social and economic upheaval 
which was the fate of Imperial Russia. The majority 
of the Italian and German upper and middle classes 
are today in a position which is not vastly different 
from what it was before the advent to power of 
Fascism and National Socialism. This, of course, re- 
fers to the economic and social status of these 
groups and leaves out of consideration the restric- 
tions imposed upon any manifestations of intellec- 
tual and political freedom. Ahd yet, although the 
Fascist and the National Socialist revolutions are 
perhaps not worthy of the name when compared 

THE ECLIPSE OF demockacy: gbrmant 55 

with the more thorough and drastic experiment car- 
ried through by the Soviets in Russia, they have 
nevertheless brought to the life of the two countries 
so many novel and vital elements that one certainly 
hesitates to describe them as mere changes in the 
form of government. To an outsider their claims to 
having given the world an entirely new social and 
political philosophy seem ridiculously exaggerated. 
But the work of domestic reconstruction accom- 
plished by Mussolini and Hitler is bound to leave a 
lasting imprint on the future development of Italy 
and Germany, and, for all we know, that may be 
only the first step toward further and more far- 
reaching readjustments. Neither movement, of 
course, claims to have reached anything like its final 




Fascism and National Socialism both claim to be 
much more than mere forms of government. “Like 
all sound political conceptions/’ writes Mussolini, 
“Fascism is action and it is thought. . . . Fascism is 
not only a law-giver and founder of institutions, it is 
also an educator and a promoter of spiritual life. It 
aims to refashion both the outward form of life and 
also its inward content — ^man, his character and his 
beliefs. To achieve this purpose it enforces discipline 
and uses authority. It enters into the soul and rules 
with undisputed sway. Therefore it has chosen as its 
emblem the lictor’s rod, the symbol of unity, 
strength and justice.” Hitler takes a no less solemn 
view of his movement. He declared that National 
Socialism is "a heroic doctrine which brings out the 
value of blood, race and personality as well as the 
eternal laws of natural selection (^Anslesegesetz) and 
finds itself in an avowed and irreconcilable opposi- 
tion to the philosophy of the pacifist international 
democracy and to its products {Auswirkungen)” 
Mussolini maintains, moreover, that the influence of 
Fascism is by no means limited to Italy. “Fascism, 



as an idea, a doctrine, a realization, is universal; it 
is Italian in its particular institutions, but it is uni- 
versal in the spirit, nor could it be otherwise. The 
spirit is universal by reason of its nature.” 

It is hardly necessary to say that to an outsider 
the prophetic and the oracular in Mussolini and 
Hitler appear to be based on a very flimsy founda- 
tion. Their teachings, to begin with, are extremely 
loose and uncertain in some essential parts. This 
undoubtedly contributed in no small degree to the 
success of the Fascist and National Socialist move- 
ments: the less precise and definite the slogan and 
the program, the wider the appeal. It will be re- 
membered that while the program of the National 
Socialist Party was declared in 1926 to be “unchange- 
able” it was officially explained that this applied 
only to the fundamental principles, and not to the 
methods by which the latter were to be put into 
practice; some of the principles were anything but 
clear and concrete. Even today they are open to in- 
numerable interpretations. This is particularly true 
of the economic policies of National Socialism and, 
in a lesser degree, of Fascism. To be rigidly doc- 
trinaire is, moreover, repugnant to the spirit of these 
movements. Mussolini maintains, for instance, that 
“Fascism should be revised, corrected, enlarged, de- 
veloped.” Under these conditions it is by no means 
easy to be sure that the views of even the leaders 
themselves expressed some time ago represent the 
opinion of the Party now. 

No intellectual movement is entirely independent. 


and a number of influences have been suggested as 
having left their imprint upon the teachings of Fas- 
cism and National Socialism. Mussolini is said to 
owe much to Machiavelli, Schopenhauer, Nietzsche, 
Renan, Blanqui, Georges Sorel, William James, 
Bergson and Pareto. The antecedents of National 
Socialism have been traced to Luther, Kant, Hegel, 
Fichte, Friedrich List, de Gobineau, H. S. Chamber- 
lain and, of course, to Mussolini himself. Many of 
these affiliations have been clearly established or 
even openly acknowledged. Nevertheless the com- 
bination of the various elements, none of them abso- 
lutely original, in the philosophy of Fascism and 
National Socialism, bears the distinct marks of their 
respective leaders and presents a system of thought 
which, if rather obscure, is fairly comprehensive. 

It would seem that the vogue of the new cults 
arises in part from the already traditional and al- 
most “ritualistic” terminology in which the writings 
of the Fascists and National Socialists are clothed. 
The written works and speeches of Mussolini and 
Hitler and of many of their followers have not lent 
themselves readily to interpretation in plain Eng- 
lish. National Socialism has in particular distin- 
guished itself by evolving a new vernacular which 
specializes in spinning endless and bizarre words into 
endless and even more bizarre sentences, often to say 
very little indeed. A non-believer who attacks these 
verbose monuments of pagan theology certainly 
needs courage and perseverance. 




One of the fundamental ideas of Fascism is the 
supremacy of the State. “Anti-individualistic, the 
Fascist conception of life,” writes Mussolini, 
“stresses the importance of the State. It accepts the 
individual only in so far as his interests coincide 
with those of the State. And it stands for the con- 
science and the universal will of man as an historic 
entity. . . . The Fascist conception of the State is 
all-embracing. Beyond it no human or spiritual con- 
cepts can exist, much less have value.” This prin- 
ciple is summarized in the well-known watchword: 
‘All in the State, nothing outside the State, nothing 
against the State.’ ” 

The “totalitarian” State of Fascism is endorsed by 
the National Socialists. In either case it is accom- 
panied by a violent denunciation of democracy in 
the struggle against which the two movements have 
fought relentlessly. Mein Kampj is full of invec- 
tives against parliamentarism and against demo- 
cratic institutions in general; for they put their faith 
not in quality, but in numbers. “Democratic 
regimes,” writes Mussolini, “may be described as 
Hiose under which the people are, from time to time, 
deluded into the belief that they exercise sover- 
eignty. . . . Democracy is a kingless regime infested 
by many kings who are sometimes more exclusive, 
more tyrannical, and destructive than one, even if 
he be a tyrant.” 

The totalitarian State is not simply an abstrac- 


tion devised for the purpose of disguising the poli- 
tical dictatorship of Fascism and National Socialism. 
It is supposed to be the vehicle through which the 
higher conception of the Nation finds its external 
manifestation. The Nation is just as exacting as 
the totalitarian State. “The individual is nothing — 
das Volk is everything!” according to a statement by 
Hitler. And the German conception of das Volk 
comprises elements which are entirely alien to the 
Italian idea of the Nation. The Hitler conception of 
nationality is in theory deeply rooted in racial, bio- 
logical and ethnographical concepts. It is based on 
the assumption of the superiority of the Nordic race, 
the purest representatives of which are believed to 
be the Germans. Hitler, Rosenberg, Goebbels, 
Streicher and the other leaders of the movement have 
devoted much space in their writings and speeches 
to the glorification of the Nordic virtues. The ques- 
tion of “blood” is in the forefront of the National 
Socialist program. The totalitarian State they are 
trying to build is to be based on the principle of 
race. It will be a national community of people of 
the same racial stock to the exclusion of all “non- 
Aryan” elements. “The science of the race is our 
German Gospel,” Heinrich Himmler, the leader of 
the S. S. troops, declared in the summer of 1935 in a 
speech which was given much prominence in the 
German press. The scientific shallowness of this doc- 
trine is so obvious that it hardly needs to be em- 
phasized. Its application in practice presents insur- 
mountable obstacles, since to arrive at any minute 



determination of the racial sources of the population 
of Central Europe, or of any other part of the world, 
is an entirely hopeless task. In Germany herself the 
racial policy of the National Socialist Government 
has been reduced for all practical purposes to a re- 
lentless and systematic persecution of the Jews and 
of all those who have any drop of Jewish blood in 
their veins. All members of the Party and of its 
affiliated agencies, all civil servants and the em- 
ployees of many private concerns have been re- 
quested to prepare family trees going back several 
generations, and these are carefully scrutinized by 
learned “experts.” The discovery, sometimes quite 
unexpected, of a grandmother or other ancestor 
whose Aryan origin was open to doubt has been the 
cause of the ruin of more than one promising career. 
The same principle, as will appear later, is now being 
enforced in the land policy of the National Socialist 
Government. Daily reminders of this strange ob- 
session from which Germany is suffering today may 
be seen in the neat little folders bearing the legend 
“My Ancestors” which are displayed in the windows 
of practically every stationery store throughout the 
land. Some are in expensive leather bindings, but 
many are cheap little things which can be purchased 
for a few pfennigs. I was strongly urged to buy one 
by a friendly and enthusiastic salesman who was 
surprised and grieved by my firm refusal. 

Mussolini, too, has spoken of the Nation in terms 
that have been interpreted by German writers as an 
endorsement of their racial theory. This interpretar 


tion is a distinct mistake. "The Italian Nation is 
an organism having aims, a life and means superior 
in power and duration to ihe single individual com- 
posing it,” says the opening paragraph of the Italian 
Charter of Labor. "It is a moral, political and eco- 
nomic entity which finds its integral realization in 
the Fascist State.” The Italian Nation as under- 
stood by the leader of Fascism, however, is some- 
thing very different from the National Socialist con- 
ception of race. In an interview with Emil Ludwig, 
Mussolini declared that "race . . . is a feeling and 
not a reality; 95 per cent a feeling.” And this sen- 
tence has since been reprinted in an official Italian 
publication under the Duce’s own signature. The 
Italian conception of the Nation is, if not more 
scientific, at least far less objectionable than that of 
Hitler. It would seem to be a romantic idealization 
of the Roman tradition, of Rome as "the palpitating 
heart of Imperial Italy,” of Rome as "a political 
conception, not a race but an animating spirit,” to 
quote Professor Gioacchino Volpe. “Rome is our 
point of departure and our reference,” wrote Musso- 
lini, "... We dream of a Roman Italy, of an Italy 
wise and strong, disciplined and imperial. Much of 
the immortal spirit of Rome has been revived in 
Fascism. Roman are our lictor’s rods, Roman is our 
fighting organization, Roman is our pride and our 
courage: Civis romanus sum. . . . The Romans 
were not only warriors but also formidable construc- 
tors who could defy and did defy time. In the war 
and in victory Italy was Roman for the first time in 



fifteen centuries.” This theory of the Nation as a 
spiritual conception and not as a racial entity is a 
fundamental and significant difference between Fas- 
cism and National Socialism. Its practical con- 
sequence is the absence in Italy of any anti-Jewish 
movement. German anti-Semitism, of course, is not 
merely the creation of Adolf Hitler. It also has its 
historical and social roots. But the personal opin- 
ions of the supreme leader in a totalitarian State are 
of paramount importance, and no reasonable person 
could possibly doubt that the Chancellor and Fiihrer 
must bear the fuU burden of responsibility for the 
treatment to which the Jews have been subjected in 
the Reich. To this I shall return in a later chapter. 


Having proclaimed the supremacy of the Nation 
and of the State, and rejected democracy as a form 
of government. Fascism and National Socialism 
must inevitably repudiate the principle on which 
parliamentary government is based. “Fascism denies 
that the majority, by the simple fact that it is a 
majority, can direct human society,” writes Musso- 
lini, “it denies that numbers alone can govern by 
means of periodical consultations, and it aflhrms the 
immutable, beneficent and fruitful inequality of 
mankind, an inequality which can never perma- 
nently be turned into equality by the mere operation 
of a mechanical process such as universal suffrage.” 
This idea, which is fully shared by the National 


Socialists, in itself lends the two movements toward 
the acceptance of that, principle of hierarchy and 
leadership wliich implies, in the words of Hitler, 
"llic absolute authority of the leaders over those be- 
low and their responsibility to tliosc above.” Parlia- 
mentary' rule, which is represented as a squabble of 
selfish interests for power, is to give place to the rule 
by an elite bound by a strict discipline and embody- 
ing the highest aspirations of the Nation. Hitler 
extols this restoration of the "unity of the spirit and 
the will of the German people.” Mussolini declares 
that he "who speaks of hierarchy says discipline.” 

Government by nn vlitc is not in itself an objec- 
tionable principle. This i.s I think, what democracy 
is striving to achieve through the machinery of gen- 
eral elections. That the procedure has not always 
been successful will be readily admitted. But what 
have Fascism and National Socialism to offer in 
place of the despised methods of democracy? To 
this all-important question they give no definite 
answer. In theory the leaders arc, presumably, 
brought forth by the workings of the law of natural 
selection. In practice, however, as we know, this 
merely means the hegemony of the political party 
which has seized power and has ruthlessly stamped 
out all opposition. Ernest Raue, following in the 
footsteps of other German writers, rightly observes 
that in the last analysis the entire doctrine of Fas- 
cism and National Socialism must be traced to the 
will of their leaders. It is the will of the leaders, 
again, that determines who shall form that elite 



which will hold in its hands the destinies of the 
country. Raue’s little book, which is a glorification 
of this and similar principles, not only won him the 
degree of Doctor of Social Sciences in the University 
of Berlin but has also had wide circulation. 

It is, moreover, maintained by Italian and Ger- 
man writers that hierarchy and elite principles are 
by no means incompatible with “real” liberty. So 
long as the State and the Party are the representa- 
tives of the Nation and the mouthpieces of national 
interests the liberties of the citizen are fully safe- 
guarded. “Par from crushing the individual,” writes 
Mussolini, “the Fascist State multiplies his energies, 
just as in a regiment a soldier is not diminished but 
multiplied by the number of his fellow soldiers.” 
The individual is free, it is claimed, so long as he 
has performed his duty to the State, and as duties 
to the Sta-te have an unquestioned priority, no con- 
flict between the “real” interests of the individual 
and the interests of the State is possible. It is only 
through the State that the individual can achieve 
complete self-expression. “Freedom is not a right, it 
is a duty,” writes Mussolini. “It is not a gift, it is a 
conquest. It is not equality, it is privilege. The con- 
cept of freedom changes with the passing of time. 
There is a freedom in time of peace which is not 
freedom in time of war. There is a freedom in times 
of prosperity which is not a freedom that can be 
tolerated in times of poverty.” It is the protection 
offered to the individual by the State, which is the 
only real guarantee of his freedom. Hitler, too, de- 


dared that “one must not always speak of the 
rights; one must also speak of the duties” of the in- 
dividual. This conception of the duty of the citizen 
to the State is given immense prominence in Ger- 
many today and the word Pflicht is one of the most 
abused words in the German language. The whole 
concept of hierarchy and of the obligations of the 
individual to the State have a distinctly militaristic 
flavor, which cannot but be pleasing to those who 
were brought up in the Prussian tradition. Musso- 
lini is quoted by Dr. Goebbels as having declared 
that “Fascism is the Roman version of Prussianism 
iromisches Preussentumy’ which is, broadly speak- 
ing, true so far as the principles underlying the two 
conceptions of the State are concerned. But the vast 
differences in the psychologies of the two countries 
have not been much diminished, I think, even by 
thirteen years of Fascist rule. 

The subordination of the interests of the individ- 
ual to those of the State or of the community plays 
a very prominent part in the theories of Fascism and 
National Socialism. “Fascbts . . . ,” writes Musso- 
lini, “think of life in terms of duty and struggle and 
conquest. They feel that life should be high and 
fuU, lived for oneself, but above all for others — ^for 
those who are at hand and those who are far distant, 
for our contemporaries, and for those who will come 
after us.” The same idea is tersely expressed in the 
motto of the Program of the National Socialist 
Party: "Gemeinnutz vor Eigennutz” “the interests 
of all before the interests of one.” This is the corner 



stone of the concept of “national solidarity,” of that 
Gemeinschaft which is one of the chief objectives 
of the totalitarian State. It has a strong appeal to 
the sentimental side of the German character and 
is used effectively. In his address opening the Win- 
ter Relief campaign of 1934, a campaign that was 
carried on under the slogan of “national solidarity,” 
Hitler strongly stressed the fact that it was not 
enough to contribute to the campaign fund ; the con- 
tribution should be made in such a manner as to 
mean a real sacrifice for the giver, “If the entire 
Nation realizes that the relief measures we are tak- 
ing involve an actual sacrifice for every one,” he de- 
clared, “then these measures will serve not merely to 
relieve material needs but they will also achieve 
something far more important. They will make one 
realize that the national community (Volksgemeinr- 
schajt) is not a mere empty concept, but an actual 
living one.” 

National solidarity is also the denial of class 
struggle. Mussolini and Hitler both won their spurs 
in fighting the red menace. Nothing more natural 
for them, therefore, than to reject the Marxian in- 
terpretation of history. Here again, however, as in 
the case of their definitions of what is meant by the 
concept of the Nation, there is a significant differ- 
ence in its interpretation by the two leaders. Mus- 
solini had long been an ardent Socialist. When he 
was expelled from the Socialist Party in 1914 he de- 
clared that he would remain a Socialist even if he 
had lost his membership card. He has travelled far 


in the last twenty years and today he rejects the 
class struggle as the great moving power of human 
society. But he still believes that there is a conflict 
of interests between capital and labor. This conflict 
however is not irremediable, as is thought by the 
Marxian Socialists. On the contrary, the interests of 
the two parties can be reconciled and it is the duty 
of the totalitarian State to see to it that an amiable 
solution is brought about. This is exactly the pur- 
pose of the corporate organization that has been 
painstakingly built up in Italy since 1926. On the 
other hand. Hitler, the son of a modest government 
employee, had to work for a time as a manual 
laborer. He gives in Mein Kampf a vivid and un- 
happy picture of the conditions of life of the prole- 
tariat. In spite of this experience he held himself 
altogether aloof from the official Socialist mots 
d’ordre. National Socialism, therefore, not only re- 
jects class struggle as a great historical force but also 
denies that there is any necessary conflict of inter- 
ests between capital and labor. If such conflict 
existed under German capitalism it was merely the 
effect of the greed and stupidity of the ruling classes 
of the “Liberal-Marxist” State. Under the benign 
influence of the National Socialist regime, it is held, 
they must and will disappear. 


The conception of national solidarity determines 
the attitude of Fascism and National Socialism to- 



ward economic problems. The course they have 
chosen is a middle one between capitalism and so- 
cialism. Article 7 of the Charter of Labor declares 
that “private interest in the sphere of production is 
the most effective and useful instrument in the in- 
terest of the Nation.” This also expresses the Na- 
tional Socialist view. The right of private property 
is thus maintained, but the exercise of this right is 
subject to the control of the State, which reserves 
the power to intervene at any moment and direct 
private initiative into the channels which it con- 
siders desirable. Sombart has stated that the eco- 
nomic organization of Fascism is “the highest syn- 
thesis of State power and authority compatible with 
the capitalist system.” The argument is advanced 
that in the German totalitarian State the employer 
is no longer the “hereditary enemy of labor” but has 
been transformed into one of the “soldiers of the 
mighty Labor Front (Arbeitsfront) of the German 
people,” and as such is doing his duty in the service 
of the Nation. It will be shown in a later chapter 
to what extent this statement is justified by the 
changes that have actually taken place in the posi- 
tion of the employers. The general principles of the 
Fascist and National Socialist policy toward capital 
and labor are briefly set forth by Hitler in a speech 
delivered in March 1935: “The people do not live 
for economic organization (Wirtschaft) and eco- 
nomic organization does not exist for capital, but 
capital is the servant of economic organization and 
economic organization is the servant of the people.” 


This is a formula that is both broad and obscure. It 
is like a promise and a menace, and it may prove to 
be both or neither. 

Little need here be said about other important 
economic principles that appear in the program of 
the National Socialist Party: the expropriation of 
land without compensation for public purposes, the 
elimination of interest on agricultural debts and of 
speculation in land values, the nationalization of 
trusts, public ownership of department stores, profit- 
sharing in the case of large concerns, and the aboli- 
tion of the “slavery of interest.” All these demands, 
of course, continue to form a theoretical part of the 
ofl&cial program. And some of them, it will be seen, 
have not remained dead letters. The most puzzling 
of all is the question of the abolition of the “slavery 
of interest.” The real meaning of this mysterious 
and ominous phrase is stiU a matter of conjecture. 
Interpretations range from the complete nationali- 
zation of all banks, the abolition of unearned in- 
come and the cancellation of all debts to the most 
innocuous explanations. It has been suggested, for 
instance, that the abolition of the “slavery of inter- 
est” really means that “every one should pay his 
debts and make no new ones”! 

The socialist tendencies of Fascism and National 
Socialism have also found their expression in their 
attitude toward labor, Article 2 of the Italian Char- 
ter of Labor declares that “work in all its forms — 
intellectual, technical and manual — ^both organizing 
and executive, is a social duty.” National Socialism 



enthusiastically accepts this principle and maintains 
that it is not only the duty of every citizen to work, 
but also his right. Hitler has stated that while every 
German was under obligation to contribute by his 
work to the general advancement of the Nation, it 
was, more than that, his right to demand that the 
government should provide him with the ways and 
means of finding a place and purpose for his labor. 
“Work and Bread” (Arbeit und Brot) has been one 
of the Nation’s slogans, and it has been the moving 
power behind the Government’s program of fight- 
ing unemployment. There has also been much talk 
about the dignity of labor. It has been extolled in 
glowing terms by Mussolini, Hitler and their lieu- 
tenants. Hitler’s dictum, “Honor work and respect 
the worker” was treated as if it were a revelation. 
And the passages from Mein Kampf which proclaim 
that the happiness and contentment of the worker 
are conditions on which depend development and 
progress of business enterprise and the success of 
the employer himself were reproduced in innu- 
merable articles and pamphlets, with comments 
which would seem to imply that no such thing 
could be possible under the Liberal-Marxist re- 

Considerable attention is also paid by Fascism 
and National Socialism to the situation of the tiller 
of the soil. It is deemed essential to improve the 
condition of the rural class and to promote farming 
not only for reasons of economic expediency — ^both 
Italy and Germany are striving hard to become self- 


sufficient in foodstuffs — but also as a matter of social 
policy. The totalitarian State thinks in terms of a 
balanced economy in which a certain ratio between 
the urban and the rural population will be main- 
tained. The excessive industrialization of Germany 
in pre-war years is believed to be responsible for 
many of her present economic evils, for social unrest 
and the growth of Communism up to 1933. The 
movement back to the farm, it is argued, will restore 
the traditional balance of the German people; it will 
also contribute powerfully to the rejuvenation of 
the race by relieving the congestion of overcrowded 
urban tenements and will give further generations a 
better chance to grow and develop in the healthy 
surroundings of the countryside. “Blood and Land” 
— Blut und Boden — is another National Socialist 
watchword of far-reaching importance. 


I have already pointed out that Fascism and Na- 
tional Socialism claim to be new philosophies, al- 
most new religions. The heroic and idealistic part 
of their teachings therefore must not be disregarded. 
Their glorification of the State and the Nation leads 
them along the path of extreme militarism. Mus- 
solini derives much of his inspiration from the mar- 
tial heritage of ancient Rome. Hitler draws his 
from Germany’s Teutonic forefathers’ and the Prus- 
sian Army. “Fascism . . .,” writes Mussolini, ‘Tje- 



Keves neither in the possibility nor in the usefulness 
of perpetual peace. War alone brings to its highest 
tension aH human energy and puts the stamp of 
nobility upon the people who have the courage to 
engage in it." Hitler has advanced very similar 
views. “No one can doubt that in the future the 
world will witness tremendous battles for the exist- 
ence of mankind,” he says in Mein Kampf; “in the 
long run only the passion for seK-preservation can 
win a lasting victory. When confronted with it, so- 
called humanitarianism, that product of a mixture 
of stupidity, cowardice and superciliousness, will 
melt away like snow in the March sunshine. In 
everlasting battles mankind has achieved greatness 
— ^in everlasting peace it would be doomed to de- 
struction.” These ideas permeate the entire social 
and political structure of the two States. We have 
already seen that the Italian Fascist Party officially 
describes itself as a “civil Militia.” The militarist 
spirit of the two movements is undoubtedly due to 
the fact that they are products of the aftermath of 
the war. Mussolini, it will be remembered, had been 
the leader of the “interventionists” both before and 
after the war. Hitler began his political career as a 
champion of that German army which, it was al- 
leged, had been “stabbed in the back” by traitors 
behind the firing line. The bulk of the followers of 
Fascism and National Socialism in the early days 
were drawn from the men who were demobilized 
from the army. Even today a war record is the best 


introduction to Party oflScials and the best qualifi- 
cations for a Party oflBce. 

According to Fascism and National Socialism war 
is not only the supreme test of the Nation but also 
the most sublime of experiences for the individual. 
National Socialist leaders have repeated over and 
over again that war is for the man what child-birth 
is for the woman. “Fascism believes ... in holi- 
ness and in heroism,” writes Mussolini, “that is to 
say in actions infiuenced by no economic motive, 
direct or indirect.” And it rejects with contempt 
the materialistic concept of happiness. “Fascism 
denies the validity of the equation well-bBing=hap- 
piness which would reduce men to the level of 
animals, caring for one thing only — to be fat and 
well fed. It would degrade humanity to a purely 
physical existence.” War occupies the very opposite 
end of the scale of values. It is in the supreme sac- 
rifice of personal interest, comforts and life itself 
that the idea of national solidarity and of the su- 
premacy of the Nation finds its highest expression. 
Contempt for purely material aims is preached to- 
day in Italy and Germany with remarkable candor 
and truly religious fervor. “Remember,” said Mus- 
solini in 1930, addressing the Young Fascists, “that 
Fascism does not promise you honors or rewards, 
but only duty and fighting.” And these are the 
promises that raise the youthful Spartans of modern 
Italy to the highest pitch of enthusiasm. For 
Fascism, as well as National Socialism, is above all 
a heroic doctrine. 




Assuming that the foregoing survey of the funda- 
mental ideas of Fascism and National Socialism 
gives a sufficiently accurate summary of their teach- 
ing, it will be readily admitted that the new philos- 
ophy contains little to afford a rational explanation 
of the amazing success of the movements themselves 
either in Italy or in Germany. The claims of Mus- 
solini and Hitler to foremost places among the spir- 
itual leaders of mankind is not borne out by an 
examination of their contribution to human thought. 
The secret of their success therefore must be sought 
not in their philosophy, which contains little that is 
new and even less that is convincing, but rather in 
the historical, political, economic and social condi- 
tions of the post-war period which paved the way for 
their triumph. It was the appeal to the emotions 
and not to reason that made Fascism and National 
Socialism what they are today. Their ideology nev- 
ertheless is the daily bread of some 43 million Ital- 
ians and 64 million Germans, and it is being dis- 
seminated with an energy and persistency that no 
other government, except perhaps that of Soviet 
Russia, has ever displayed before-— and this with a 
technique greatly superior to that of the U.S.S.R. 
It would be a fascinating study to attempt to dis- 
cover what the supporters of Mussolini and Hitler 
really think of the fundamentals of the regime they 
are helping to establish. I cannot claim to have 
made any such study which moreover, for obvious 


reasons, is not feasible. But during visits to Italy in 
1935 and to Germany in 1934 and 1935 I made a 
practice of asking Italians and Germans whom I had 
a chance to meet to tell me what, in their opinion,' 
represents the essence of the philosophy of their 
national government. Such casual conversation, 
needless to say, offers no real ground for broad gen- 
eralizations. Nevertheless the answers I received 
proved to be interesting and sometimes illuminating. 

There are obviously a large number of people in 
both Italy and Germany who are opposed to their 
present governments, and their criticism is no less 
unsparing, if more discreet, than that we are used 
to outside their frontiers. Discreet though it be, 
criticism of this kind is much more frequent and 
outspoken than the outsider usually imagines. In 
Italy, where Fascism has been at the helm for thir- 
teen years, the ranks of the Party have inevitably 
absorbed certain elements whose attitude toward 
the regime is in certain cases lukewarm and in others 
even hostile. I have heard men wearing in their 
lapels the Fascist badge, which is compulsory for 
members of the Party, denounce Mussolini with a 
bitterness which no political emigre could possibly 
excel. And I was told that their membership in the 
Party was a necessity which made them feel 
ashamed of themselves. 

The attitude of such people, whose personal trag- 
edy cannot but inspire the deepest sympathy, may 
have no special value for the present discussion, 
since it is an attitude necessarily similar to that of 



the many critics of Fascism and National Socialism 
abroad. Moreover, what I was trying to get was 
some glimpse of the reasoning which makes the 
masses of the people rally to the lictor’s rods and 
the swastika. It was therefore from men and women 
who were in one way or another associated with the 
respective regimes that I attempted to obtain my 
information. There is probably a considerable per- 
centage among them who have bowed to nec^sity 
and are serving Fascism and National Socialism be- 
cause Fascism and National Socialism are now their 
masters, and because any sign of opposition might 
get them into the most serious trouble. But far the 
greatest number, I think, are supporting the regime 
because they have found in it certain elements 
which they can endorse. One of the advantages of 
political and social doctrine that partakes of many 
elements is that it offers opportunities to its fol- 
lowers to concentrate on certain phases only and to 
disregard altogether or at least thrust into the back- 
ground those which they find particularly unpala- 

The discussions I had with Italians over a bottle 
of Chianti in some backstreet trattoria or with Ger- 
mans over a glass of Wurzburger in a Bierhalle 
brought out very clearly the fundamental difference 
in the attitude of the two peoples. The Italians, as 
a rule, do not take the official doctrine of Fascism 
too seriously. Except for the learned and the aca- 
demic who produce elaborate volumes on the theory 
of the Corporate State, they usually dismiss the sub- 


ject with general comments on Mussolini’s genius, 
the remarkable progress Italy has made under his 
rule, the improvement in public services and build- 
ing activities, the progress of physical education or 
some kindred matter, which would seem to betray 
an interest in the concrete results obtained, rather 
than in the metaphysical aspects of Fascism. 

Even high government officials in charge of the 
important policies of the regime frequently discuss 
Fascism’s theoretical aspects in a manner which, 
while very witty and entertaining, is a better proof 
of their delightful sense of humor than of any blind 
bowing down to Fascist Truth. The young people, 
with whom the Duce is immensely popular, seem to 
be more interested in football and skiing than in the 
moral principles underlying the Charter of Labor. 
Who would blame them for that? The glorification 
of the regime in Mussolini’s passionate rhetoric is 
not incompatible with a certain carefully measured 
degree of self-criticism. After thirteen years of its 
rule Fascism, I think, is willing to look upon itself 
in a manner that is not wholly uncritical. It is 
proud of what it considers to be its achievements, 
but it does not completely shut its eyes to its short- 
comings. Freedom from dogmatism and a keen sense 
of humor have always been among the most attrac- 
tive aspects of the Italian character. It is by no 
means certain that the Duce himself does not sym- 
pathize with this attitude. Did he not for years 
keep the movement from any dogmatic entangle- 
ment as a “free body of athletic men”? 


The Germans take their National Socialist philos- 
ophy or Weltanschauung in much more serious vein. 
This may be due partly to the fact that Hitler’s 
road to power was longer, his struggle more stubborn 
and partly to the fact that his tenure of office has 
been shorter than Mussolini’s. But the real expla- 
nation is probably to be found in German character 
itself and that attitude toward life in which duty 
(Pflicht) in the sense of dogma sanctified by the 
proper authority plays so important a part. The 
Weltanschauung is duly canonized and is the subject 
of learned lectures in schools and universities and 
of innumerable discussions in the organizations of 
the Party and its various subsidiaries. Nevertheless 
it should not be thought that the intricacies of the 
National Socialist theology have already penetrated 
deeply into the mind of the rank and file. The usual 
answer to the question “What, in your opinion, is 
the essence of the Weltanschauung?” was that this 
was a very difficult thing to explain. Some of the 
members of the National Socialist Party displayed 
no more interest in its ideology than did many of 
the Italian Fascists in the ideology of Fascism. But 
even among those who had pondered over the writ- 
ings of the National Socialist prophets or received 
the proper schooling in the teachings of Hitler, 
Goebbels, Rosenberg and Streicher there is a con- 
siderable divergence of view as to what constitutes 
the kernel of the new philosophy. One heais, of 
course, invariable references to the achievements of 
the regime, to the elimination of the Communist 


danger, the reduction of unemployment, the resump- 
tion by Germany of her place as a great military 
Power. The intense nationalism and the heroic as- 
pect of National Socialism make a strong appeal to 
many, and at least on one occasion I was told that 
the "liberation” of Germany from the Jews was the 
real and the highest aim of the Hitler movement. 
This remark came from a magnificent-looking young 
man in a black S. S. uniform. Among the younger, 
generation there is also a very definite tendency to 
dwell on the presumably unlimited possibilities for 
national betterment resulting from unified leader- 
ship and the creation of a "common will.” My very 
definite impression from contacts with the local offi- 
cials of the National Socialist Party is that many 
of them are sincerely and deeply engrossed in the 
work of social and economic rehabilitation in which 
the present Government is very active, and that to 
them this effort to improve the lot of the less fortu- 
nate members of the community represents the very 
essence of the Weltanschauung. I tried to argue, in 
answer, that there was no necessary connection be- 
tween such commendable efforts and the theory of 
the race and National Socialist dictatorship in gen- 
eral. They would not listen to me, of course, and 
invariably replied that National Socialism is suc- 
ceeding where democracy failed, which, historically, 
is probably not true. 

The older generation, including some of the vast 
army of government officials, finds itself in a more 
difficult position since it has been brought up in 



ideas that are different in more than one respect 
from those of Germany’s present rulers. These peo- 
ple, I think, try hard to restore their moral balance 
by concentrating on the nationalist parts of the Hit- 
ler philosophy,, on the principle of national solidarity 
and the sacrifice of one’s individual interests to those 
of the Nation. This is why one finds, neatly framed 
on the wall of so many German oflSces and homes, 
the following verses ascribed, wrongly I am told, to 

Du sollst an Deutscklands Zukunft glauben, 
an deines Volkes Auferstehen. 

Lass diesen Glauben dir nicht rauben 
trotz allem, was geschehen. 

Und handeln sollst du so, cds hinge 
vor dir und deinem Tun allein 
das Schicksal ab der deutschen Dinge, 
und die Verantwortung war dein. 

Of this poem the following is a free translation: 

Believe in the future of Germany; 
in your people’s resurrection. 

Undismayed, believe; 
in spite of ail that may befall. 

With unwavering courage 

art as though on you and on what you do 

depends Germany’s high destiny; 

as though you alone were responsible 

and the fate of the Fatherland in your hand. 


By giving prominence to the nationalist sentimen- 
tality of Fichte, if Fichte’s it was, it is possible to 
dismiss from one’s mind the intolerance and harsh- 
ness of the race theory and to try to forget the bru- 
tality and violence of the National Socialist methods 
by treating them as merely one passing manifesta- 
tion of a revolutionary crisis. It would be unwise to 
assume, however, that sentimentality dominates the 
interpretation of the Weltanschauung which is 
pumped into the heads of hundreds of thousands of 
young Germans by booted and uniformed oflScials 
in military and semi-military camps. Here ideas of 
race and nationalist intolerance hold their place side 
by side with the exaltation of the supremacy of the 
State and national solidarity and, indeed, weld into 
one and the same doctrine. And it is largely on the 
attitude of these rising generations that the future 
course of Germany depends. 




The element of vagueness and uncertainty which 
characterizes the teaching of Fascism and National 
Socialism persists when one turns to the examina- 
tion of their economic and social institutions. Al- 
though the beginnings of the Corporate State in 
Italy may be traced back to 1926 and perhaps even 
earlier, and although the Italian experiment has cre- 
ated a vast literature, the structure Mussolini is 
building up is still by no means completed. Until 
1934 Italy was a Corporate State without corpora- 
tions. It was only by the law of February 5, 1934, 
that the corporations were officially established. In 
the summer of 1935 they were still in an embryonic 
stage, some of them existed merely on paper and 
discussion as to the form and functions of the new 
institutions was as keen as ever. The provisional 
character and imperfection of the present corporate 
organization is admitted in Rome. In the Via Vit- 
torio Veneto, the very heart of the new section of 
the city, stands the magnificent modernist-style 
building of the Ministry of Corporations. On the 



walls of its reception room the Charter of Labor has 
been traced in mosaics in the midst of a sumptuous 
decorative design in which the lictor’s rods occupy a 
predominant place. But the affable and courteous 
officials who put themselves at the complete disposal 
of the foreign visitor and shower upon him publica- 
tions in various foreign languages dealing with cor- 
porate activities, somewhat surprise him by the po- 
lite but firm statement that, although the Ministry 
of Corporations has been in existence for a number 
of years, the Corporate State itself is still largely a 
thing of the future. To reproduce this statement is 
perhaps no gross indiscretion since the Duce in an 
address before the joint meeting of the councils of 
the 22 corporations in November 1934 declared that 
“we are still at the starting point, not at the point 
of arrival.” The organization therefore is admittedly 
tentative and subject to further readjustment. 

The situation in Germany is even less certain. The 
country is still in the early stages of the process of 
reconstruction, and much that exists at present is 
bound either to disappear or to be completely re- 
modelled. There is a considerable degree of disagree- 
ment within the Fascist and the National Socialist 
Parties as to the methods and even as to some of the 
principles on which their economic and social policies 
are to be based. The new legislation is often clothed 
in such involved and abstract phraseology that to 
ascertain its real meaning is anything but an easy 
task. Not infrequently it is permissive and not man- 
datory, and it would be risky to assume that this or 


that novel institution discussed with a wealth of 
detail in a verbose decree does really exist. With all 
these reservations the general framework of the in- 
stitutions Italy and Germany are trying to set up 
may be regarded as reasonably clear. With the prin- 
ciples on which they are based we are already 
familiar. Chief among them is that of the supremacy 
of the Nation and of the State over the individual, 
and the subordination of individual and class inter- 
ests to those of the community. In his speech before 
the National Council of Corporations on November 
14, 1934, Mussolini declared that on the day the 
Grand Council of Fascism was established in 1923 
political liberalism was buried. “Today,” he added, 
referring to the bill providing for the establishment 
of corporations which was under discussion, “we are 
burying economic liberalism.” This is to be accom- 
plished through the intervention of the State, with 
the preservation at the same time of the rights of 
private property and private initiative; for, it will 
be remembered, they are the very foundation of the 
present interpretation of the economic programs of 
Fascism and National Socialism. The intervention 
of the State, however, would consist mainly in the 
organization of the economic forces of the country 
for the best interests of all and would be free from 
bureaucratism and monopolies, which are associated 
with Socialism. The “end of economic liberalism” 
thus interpreted, would seem to be reduced to the 
supervision of private interests by the State, which 
is not fundamentally different from similar restric- 



tions imposed in non-Fascist countries. Laissez 
jaire as a comprehensive policy has never existed 
at all and is certainly not to be found in any of the 
modern industrialized nations. Italy and Ger- 
many nevertheless approach the question of govern- 
ment control over economic activities in a spirit en- 
tirely different from that of the democracies or of 
the Soviet Union, a spirit which bears the marks of 
that confused struggle between romanticism, meta- 
physics, and radicalism which is characteristic of the 
two regimes. 


The Italian Corporate State has its roots in the 
past syndicalist history of the Italian labor move- 
ment and is built around that already familiar prin- 
ciple of Mussolini which denies that the class strug- 
gle is one of the necessary moving forces of progress, 
but admits the existence of the conflict between the 
interests of capital and labor. This tenet has been 
finally embodied in the Corporate State which pro- 
vides for two parallel sets of institutions; the asso- 
ciations or syndicates of employers and of employees, 
with the State and Fascist Party as the supreme 
arbiter and connecting link. The principle itself was 
not accepted without a struggle. Some of the Fascist 
leaders, among them Edmondo Rossoni, were ar- 
dently in favor of the creation of a single organiza- 
tion in which employers and workers should both 


participate. To this proposal the Confederation of 
Italian Industries, an association of employers, took 
strong exception. The matter was finally settled in 
favor of maintaining the identity of both the em- 
ployers’ and the workers’ organizations. In Decem- 
ber 1923 the decision was embodied in the so-called 
agreement of the Palazzo Chigi which was itself the 
outcome of a meeting between the representatives of 
the associations of employers and of workers over 
which Mussolini presided. A further important step 
toward the creation of the Corporate State was the 
agreement of the Palazzo Vidoni on October 2, 1925, 
when the employers recognized the Fascist Con- 
federation of Workers as the sole representative of 
labor, and the latter recognized the Confederation 
of Italian Industries as the sole representative of 
the employers. All relations between the two parties 
were to be carried on through the instrumentality 
of the two Confederations. Thus the road was 
cleared for the establishment of the Corporate 

The Law of April 3, 1926, gave the association of 
the employers and that of the workers legal recog- 
nition and provided that no more than one such 
association should be so established for each cate- 
gory of production; that is, one for the employers 
and one for the workers. Such legal recognition is 
granted by a Royal Decree on three general condi- 
tions: that the association shall comprise not less 
than ten per cent of the total number of workers 


employed in that particular branch of production in 
a given locality; that the association make provision 
not only for the protection of the economic interests 
of its members, but also for the advancement of 
their social welfare, and their “patriotic and moral” 
education; and that the leaders of the associations 
“give guarantee of ability, morality and sound na- 
tional loyalty.” The association which secures legal 
recognition becomes the sole representative of the 
employers or workers, of the category concerned, 
for the territorial subdivision covered by the asso- 
ciation, irrespective of whether such employees or 
workers are members of the association or not. 
Other professional associations are not prohibited, 
but their sphere of action is so limited by the powers 
of the legally recognized associations that the high- 
sounding declaration of the Charter of Labor that 
“there is complete freedom of professional or syndi- 
calist organizations” remains a dead letter. 

The local associations of employers and workers 
which are organized on the occupational principle, 
form the basis of the pyramid which comprises com- 
munal, provincial and inter-provincial associations, 
then federations and, at the top, the national con- 
federations. The number of the latter, since 1934, 
has been reduced to nine. There is one national con- 
federation of employers and one national confedera- 
tion of workers for each of the four chief fields of 
economic activity: industry, agriculture, commerce, 
and banking and insurance. The ninth national con- 


federation consists of organizations of artists and 
members of the liberal professions.^ 

The principal object of the associations of em- 
ployers and workers in the early days was the set- 
tlement of labor disputes, the conclusion of collec- 
tive labor contracts, and also educational and social 
work. These functions they have retained ever since. 
But even then the Law of April 3, 1925, mentions as 
among the purposes of the associations “measures 
for promoting and improving national production.” 
The Deci’ee of July 1, 1926, speaks of the corporation 
as a liaison organ of the “national syndical organi- 
zations of the several factors of production.” It is 
there described as “an organ of State administra- 
tion” and it has among its functions that of “pro- 
moting, encouraging and subsidizing all initiative 
which is designed to coordinate and improve pro- 
duction.” The Charter of Labor further develops the 
idea of the Corporate State. “Corporations,” says 
Article 6 of the Charter, “constitute the unitary 
organization of all forces of production and integrally 
represent their interests. In virtue of this integral 
representation, since the interests of production are 
the interests of the Nation, the corporations are 

*The Law of February 5, 1934, estabUshing the corporations, 
provides that the local associations below the grade of federation 
must be “autonomous.” A decree of August 16, 1934, puts this 
provision into effect by revoking the legal recognition which mch 
associations enjoyed in the past, their powers being now derived 
from the confederations. An exception is made of the associations 
of artists and professional men. This change of status does not 
affect the factual position of local associations which continue to 
remain the basis of die corporate system. 


recognized by the law as State organs. Representing 
the unitary interests of production, corporations 
may enforce binding regulations for the discipline 
of labor relations as well as for the affiliated asso- 
ciations.” Improvement of production is also the 
immediate object of the association of employers 
who, according to Article 8 of the Charter, “are re- 
quired to promote by all possible means the increase 
and improvement of production and reduction of 
costs.” And Article 9 provides that “State interven- 
tion in economic production enters in only when 
private initiative is lacking or insufficient, or when 
the political interests of the State are involved. 
This intervention may take the form of control, 
assistance or direct management.” The Fascist State 
is primarily a State of “producers” and this is why 
even the confederation representing artists and lib- 
eral professions is requested by the Charter “to 
promote the interests of art, science and letters, 
with a view to improving production and to the 
achievement of the moral object of the syndicalist 

The corporations heralded by the Charter of Lar 
bor did not materialize until 1934. In the meantime 
the National Council of Corporations, which had 
existed since 1926 as a merely advisory body within 
the Ministry of Corporations, was reorganized on an 
entirely new basis by the Law of March 20, 1930. 
It became the first official link between the associar 
tions of employers and those of employees. Since 


1930 the Head of the Government has presided over 
the Council, which consists of the members of the 
cabinet, high officials of the Fascist Party and repre- 
sentatives of the associations elected by the respec- 
tive organizations and appointed by Royal Decree 
upon the proposal of the Head of the Government. 
The jurisdiction of the National Council is very 
broad. It includes the “application and integration 
of the principles of the Charter of Labor according 
to the development of the corporate system and the 
requirements of production.” Moreover the Council 
“may be called upon to give its opinion on any 
question whatsoever relating to national produc- 

The last and crowning step toward the creation of 
the Corporate State was the Law of February 6, 
1934, and the decrees that put its provisions into 
effect. Corporations which had for so long been 
promised now came into being as liaison organs be- 
tween the associations of employers and of workers. 
Mussolini defined them as “instruments which, un- 
der the aegis of the State, carry out the integral, 
organic and unitary discipline of productive forces, 
with a view to the development of the wealth, the 
political power and the weKare of the Italian peo- 
ple.” In less abstract terms a corporation may be 
said to be a group of industrial, professional and 
trade associations united under a board known as 
the council of the corporation. The selection of the 
associations and syndicates which are included in 


each corporation is based on the idea of the “cycle 
of production.” That is, it embraces all the phases 
of a process of production from the getting together 
of the raw materials to the sale of the finished goods. 
In certain cases the intcr-conncctcd cycles of produc- 
tion have been brought together into the same cor- 
poration. The council of the corporation is headed 
by a member of the cabinet, an undcr-sccrctary of 
State, or the Secretary of the Fascist Party. The 
members of the councils of corporations arc elected 
by the affiliated organizations and are appointed by 
the Head of the Government on the recommenda- 
tion of the Minister of Corporations. In 1935 the 
two offices were held by Mussolini. Each council 
includes technical experts and representatives of 
the State and the Fascist Party who, according to 
Mussolini, watch over the interests of the consumers. 
The membership of the councils varies from 67, in 
the case of the Corporation of the Chemical Indus- 
try, to 15 for the Corporation of Beet and Sugar. 
The total number of members of the councils of cor- 
porations in 1935 was 823, of which 318 represented 
employers, 315 labor, 34 technical experts, 19 arti- 
sans, 11 cooperative organizations, 19 public institu- 
tions, 41 liberal professions and artists, and 66 the 
Fascist Party. 

The number of corporations in 1935 was 22. They 
were subdivided, according to the “cycle of produc- 
tion” into three classes: (1) corporations connected 
with agriculture, industry and commerce; (2) cor- 
porations connected with industry and commerce; 


and (3) corporations connected with services.* The 
field of activity of the corporations is very broad and 
includes, in addition to the duties specified in the 
Charter of Labor and subsequent legislation already 
mentioned, that of “regulating economic relations 
and the unitary discipline of production.” The deci- 
sions of the corporations were originally subject to 
the approval of the National Council of Corpora- 
tions and became law if and when promulgated by a 
decree of the Head of the Government. By the Law 
of April 18, 1935, the first of these provisions was 
changed in the sense that the decisions of the cor- 
porations are now approved not by the National 
Council of Corporations, which is a large assembly, 
but by the Central Corporative Committee, a much 
smaller body, consisting of members of the Cabinet, 
the Secretary of the Fascist Party, the vice-presi- 
dents of the 22 corporations, presidents of the na- 
tional confederations of employers and of workers, 
and representatives of other organizations. 


This very bare outline of corporate structure will 
perhaps suffice to bring out its extraordinary com- 
plexity. The elements of duplication and overlap- 

*The copiplete list is as follows: cereals, fruits, vegetables 
and flowers; viticulture and wine; beet and sugar; edible oil; 
animal husbandry and fisheries; forest^, lumber and wood; 
textiles and engineering; chemicals, clothing; paper and publish- 
ing; building, water, gas, and electricity; mining and quarry- 
ing; glass and pottery; credit and insurance; arts and profe^ 
sions; sea and air transportation; inland commumcations; public 
entertainment; hospitality. 


ping are many. The basic units — the associations of 
employers and of workers — are organized on the ver- 
tical principle into national confederations, and on 
the horizontal principle into corporations. They also 
send their representatives to the provincial councils 
of corporate economy which were established in 1931 
and are officially described as “corporations on a 
provincial scale.” There seem to be at least two 
“corporate Parliaments”: the National Council of 
Corporations and the Chamber of Deputies which 
consists very largely, it will be remembered, of mem- 
bers selected from the lists sent to the Grand Coun- 
cil of Fascism by the national confederations of em- 
ployers and of workers. No wonder the abolition of 
the Chamber of Deputies is generally anticipated. 
The councils of the 22 corporations were moreover 
convened by the Duce in a joint session in the au- 
tumn of 1934. This looked suspiciously like a third 
corporate Parliament! There are also the Central 
Corporative Committee, the Ministry of Corpora- 
tions, the Senate, and the Grand Council of Fascism, 
all of which possess rather broad if somewhat inde- 
terminate powers in the shaping of the institutions 
and policies of the Corporate State. And last but not 
least there are the ubiquitous Fascist Party and the 
Capo del Govemo himself whose consent is required 
and whose powers are unlimited. In theory the offi- 
cers of the associations are elected, but in practice 
only men acceptable to the Government and the 
Party are nominated. The associations of the vari- 


ous grades are under the close supervision of the 
ministers, the prefects or the co mm unal authorities. 
These oflBcials exercise the right of veto over the ap- 
pointment of the officers of the associations. I was 
assured at the Ministry of Corporations that no in- 
stance of the use of this right of veto is on record. It 
is the duty of the Fascist Party to see to it that no 
undesirable person can ever be nominated* 

What is the real purpose of this elaborate struc- 
ture? “The corporation is formed to increase the 
wealth, the political power, and the well-being of 
the Italian people,” according to Mussolini. “These 
three objectives are conditional each on the other. 
Political strength creates wealth, and wealth in its 
turn invigorates political action. I should like to call 
your attention to the objective stated: the well- 
being of the Italian people. It is essential that these 
institutions we have set up may at a given moment 
be felt by the masses themselves as instruments 
through which those masses improve their stand- 
ard of living.” This purpose, which is commend- 
able, is to be achieved, in the words of the Duce, 
“through the self-discipline of the categories con- 

The element of free cooperation and self-discipline 
is always emphasized in Fascist theory, but is it car- 
ried into practice in Fascist institutions? The powers 
of the elaborate system of corporate bodies are 
merely advisory and the institutions themselves are 
under the complete control of the Party. The bring- 


ing of a vcrj' large percentage of the employers and 
workers * into closely knit, and well-regimented trade 
associations may be of considerable help in carrj'ing 
into effect various measures for the coordination of 
industrial production. Such associations may cer- 
tainly tender useful advice to the Government in 
dealing with technical problems. But this is hardly 
a sufficient justification for Mussolini’s statement 
that "Corporativism supersedes Socialism and super- 
sedes liberalism: it creates a new synthesis." What 
Mussolini presumably means is that the corporate 
system supersedes Socialism because it is based, in 
theory, on the voluntar)* cooperation of the produc- 
ers of ever}' stage. This, as we have scon, is not the 
case in practice, since only one association for each 
categor)' is legally recognized, its decisions arc bind- 
ing on all those employed in that trade whether they 
are members of the association or not, and the or- 
ganization itself is under the complete control of the 
Government and the Fascist Party. Mussolini’s sec- 
ond claim for coporativism — that it supersedes lib- 
eralism — seems to reflect the belief that the organi- 
zation of branches of production into professional 
associations is something alien to economic liberal- 
ism. Such associations nevertheless e.xist in the non- 
Fascist countries whose doom has been so often 
sounded by the Duce. There is no question that the 

' On December 31, 1034, the membership of the assoemtions of 
employees wns 1.5 million, repracentini; 7.S million people; and 
the membership of the associations of workers was 4.7 million, 
representing 7.1 million people. 


Government and the Fascist Party have built up a 
powerful machinery for the control of the economic 
activities of the Nation, and that they have in their 
hands an instrument which is more obedient than 
that at the disposal of mere democracies. But it is 
extremely difBcult to say whether it is really more 
effective. It is readily admitted that under the Fascist 
rule Italy has made considerable progress along the 
road of industrialization and the development of her 
national resources. But it is by no means clear 
that this was due to the “self-discipline of the cate- 
gories concerned,” as claimed by the Duce, and not 
perhaps to the influence of his own dynamic person- 
ality, vastly amplified through the machinery of the 
Party. The State and the Party are so closely asso- 
ciated with the work of the corporate institutions 
and play so important a part in their decisions that 
it would be idle to attempt to discover which deci- 
sions are the result of official pressure and which 
are due to self-discipline. 

The early resolutions of the new corporations offer 
little guidance as to their future course. The cor- 
porations which met in the first eight months of 
1935 concerned themselves largely with technical 
problems of the respective trades, with special em- 
phasis on the development of those branches of pro- 
duction which could result in the reduction of im- 
ports from abroad. Such measures were taken, for 
instance, in the case of flax, wool, alcohol distilled 
from beets, and lubricating oil. In dealing with these 


matters the corporations, which are representative 
organizations of the trades concerned, can naturally 
be of great assistance to the Government in carrying 
out its policies. 

The right of private property and individual en- 
terprise has not been seriously curtailed by the cor- 
porate organization. Nevertheless some minor legis- 
lative restrictions have been introduced. The Decree 
of June 16, 1932, for instance, provided for the com- 
pulsory membership of enterprises in an association 
{consortium) if and when the Head of the Govern- 
ment so orders. This measure, like a number of 
others which have been decided upon since the be- 
ginning of the depression, is directed toward the 
strengthening of the industrial structure, which was 
showing signs of great weakness. The Government 
also took a prominent part in rescuing the banks; 
and it aided in the reorganization of industrial en- 
teiprises by creating first the Istituto Mobiliare 
Itcdiano, at the end of 1931 and then, about a year 
later, the Istituto “per la Ricostruzione Industriale. 
The business of the latter institution is the refinanc- 
ing of industrial enterprises and the liquidation of 
those that are no longer sound. These steps, how- 
ever, like those for the control of foreign trade and 
the promotion of substitutes for commodities im- 
ported from abroad, must be considered as measures 
of expediency rather than as an integral part of ihe 
policy of the Corporate State. The Law of January 
12, 1933, which requires a government license for 
the installment of new industrial plants or the ex- 


tension of the existing ones, is in a different class. It 
is in harmony with the Fascist idea of the duty of 
the State to direct private initiative into the chan- 
nels where it will best serve the interests of the com- 
munity. The practical effect of this measure has so 
far been slight. 

Until the beginning of the East African campaign 
there had been no attempt to control prices by legis- 
lative measures, although the level of prices had 
been influenced by Government intervention and 
also by pressure from the Party. In relatively few 
cases have the volume and nature of production 
been affected by the activities of the corporate 
bodies. There have been instances, although I was 
told exceptional ones, of the cutting down of the 
high salaries of oflSicers of industrial enterprises and 
banks, but such action came not from the corporate 
institutions but from the Government. More signifi- 
cant are the changes that have taken place in the 
relations between employers and labor; they will 
be discussed in the next chapter. Yet, although the 
position of the private enterprise has not been di- 
rectly impaired, the tying up of the economic organ- 
ization of the countiy with its political machine and 
with the machine of the Party has introduced a de- 
gree of State control that opens practically bound- 
less possibilities for further expansion of govern- 
ment intervention. Viewed from this angle, the end 
of economic liberalism announced by Mussolini is 
a great deal more than an empty phrase. It would 
seem however to be the result not so much of the 


growth of the “corporate spirit” which the Fascist 
organization is supposed to promote, as of the direct 
and indirect action of the State and the Party. 


The economic program of the National Socialist 
Party, as has already been pointed out, offered prac- 
tically unlimited latitude for interpretation. The 
Hitler movement has grown with such fantastic 
speed and has carried in its fold so many different 
elements whose economic and social aspirations were 
anything but identical that it would have been 
unreasonable to expect the Government of January 
1933 to produce a coherent scheme of economic reor- 
ganization. The first months of the National Social- 
ist regime were largely devoted to political reforms 
and to the consolidation of its power. There was 
much talk of the creation of a Corporate State which 
would combine some of the features of the Italian 
organization with those of the German medieval 
guilds. A definite step in this direction was the or- 
ganization, on September 13, 1933, of the “Agricul- 
tural Estate” iReichsndhrstand) which proved an 
effective method of bringing the entire agriculture 
and food industry under the control of the Govern- 
ment.* A few days later, on September 22, 1933, -the 
Reich Chamber of Culture (Reichskulturkammer) 
came into being. It was put under the control of the 
Ministry of Propaganda of which Dr. Goebbels is 

* See below, p. 179 sgq. 


the head, and extended its jurisdiction and supervi- 
sion to art, music, literature, the press, the theater 
and the radio, the moving picture industry and ad- 
vertising. The last was led to organize itself in a spe- 
cial council under the Reich Chamber of Culture 
and was made subject to a very close and detailed 
government control. But the bulk of German indus- 
try was not subjected to regimentation until the 
end of 1934, although in tiie meantime the hand of 
the State gradually made itself felt. 

On February 27, 1934, came the “Law for the Or- 
ganic Reconstruction of German Business” {Gesetz 
zur Vorbereitung des organischen Aujbaus der 
deutsehen Wirtschaft) which conferred upon the 
Minister of Economics wide powers. The Minister 
was authorized to name trade associations as sole 
representatives of any branch of commerce or indus- 
try; to make membership in such associations oblig- 
atory for all firms’ engaged in that line of business; 
and also to set up new trade associations and merge 
or dissolve the existing ones. This decree introduced 
into business organization the principle of leader- 
ship, which is an essential element in the National 
Socialist ideology. By virtue of these powers the 
Minister of Economics issued a decree on March 13, 
1934, by which all the industrial and commercial 
activities of the country, except those included in 
the Agricultural Estate and in the Reich Chamber 
of Culture, were organized into 12 Hauptgruppen. 
Seven of them comprised the chief industries, and 
the remaining five included handicrafts, commerce. 


banks and credit, insurance and transport. A thir- 
teenth Hauptgruppe, that of public utilities {Energie- 
mrtschaft) was soon added. All the numerous 
trade associations that existed in Germany in the 
past were brought under the sway of the new or- 
ganization. This coordination of industrial and com- 
mercial associations did not seem greatly to alter the 
situation and had little effect except, perhaps, in so 
far as they minimized their cost to members by a 
certain reduction of overlapping charges. 

On August 2, 1934, Dr. Hjalmar Schacht suc- 
ceeded Dr. Kurt Schmitt as Minister of Economics, 
and the reorganization of business entered upon a 
new phase. A decree of November 27, 1934, estab- 
lished the Reich Chamber of Economics (Reichs- 
wirtschaftskammer) the constitution of which was 
further developed and elaborated by the Decree of 
May 3, 1935. The business organization that grew 
out of this legislation is one of extraordinary com- 
plexity. The semi-official diagram depicting the new 
structure has driven to despair not only foreign stu- 
dents but also many of the German officials who, 
presumably, are fully conversant with the intricacies 
of the German way of thinking. Reduced to its 
fundamental elements the Reich Chamber of Eco- 
nomics may be said to consist of two sets of organi- 
zations: (1) the Reichsgruppen (industry,” commerce, 
banks, insurance, public utilities, and handicrafts) 
which, with their local organs, are professional asso- 

‘ The Reichsgmppe Industrie is subdivided into seven Haupt- 
gruppen embracing various branches of industry. 


ciations of the respective branches of economic ac- 
tivity organized on the vertical principle; and (2) 
the chambers of commerce and industry, which are 
regional associations organized on the territorial or 
horizontal principle. The distinction between the 
two sets of organizations as vertical and horizontal 
is not absolutely correct but it gives a fair picture 
of the principle underlying the whole structure. The 
same industrial and commercial enterprises therefore 
are controlled by the Reich Chamber of Economics 
for different purposes, either through the Reichs- 
gruppen or through the Federation of the Chambers 
of Commerce and Industry. For the chambers of 
commerce and industry are organized into a Federa- 
tion {Arheitsgemeinschajt der Industrie- und Han- 
deUkammerninderRekhswirtschaftskammeT) whioh. 
is incorporated in the Reich Chamber of Economics. 
The conservative and old-established chambers of 
commerce and industry, the complete abolition of 
which was freely predicted, not only survived the 
reorganization but retained their identity and are 
even represented in the Reich Chamber of Econom- 
ics as a separate unit through their Federation. This 
has provoked much comment and has been inter- 
preted by many as a victory for the conservative ele- 
ments. It is impossible to say to what extent this 
interpretation is correct, although there is little 
doubt that the maintenance of the chambers of com- 
merce and industry did not displease business. 

The unquestionable result of the creation of the 
Chamber of Economics has been that the Govern- 


ment now has practically unlimited power over the 
entire business of the country and unlimited possi- 
bilities for influencing it. The Chamber of Econom- 
ics, like all National Socialist institutions, is based 
on the leadership principle. Its president, as also 
the president of the Federation of the Chambers of 
Commerce and Industry, is appointed by the Min- 
ister of Economics; and all other officials of the or- 
ganization and of its local ramiflcations are appointed 
from above, and not elected as they were formerly in 
the old trade associations. The budget of the Cham- 
ber of Economics is, moreover, subject to approval 
by the Minister of Economics. The purpose of the 
reorganization as it emerges from official and semi- 
official comments is both to increase the hold of the 
State over business and likewise fundamentally to 
change the character of professional and trade asso- 
ciations. The duties of the appointed leaders of Ger- 
man business are rather to promote “national soli- 
darity” (Gemeinschaft) than to defend professional 
or trade interests. It is presumed that the Chamber 
of Economics will outgrow the traditional profes- 
sional and class mentality which its component parts 
may possibly still retain from former days and de- 
velop into an institution guided primarily by nar 
tional interests. This is the familiar principle of the 
National Socialist program: Gemeinnutz vor Eigen- 
nutz. Perhaps not all German business men are en- 
thusiastic about it, but they keep quiet. Inciden- 
tally, one of the minor purposes of the reorganization 
was the desire to reduce, by eliminating overlapping, 


the cost to business of the maintenance of the trade 
associations. Judging by reports that have appeared 
in the German press this object of the Chamber of 
Economics was not achieved in the first months of 
its operation. It would seem that in a number of 
cases the cost to business has increased and not 

The most remarkable feature of the German or- 
ganization of business is, perhaps, the peculiar posi- 
tion in which the employers find themselves toward 
labor. Here the difference between the Fascist and 
the National Socialist approach comes out clearly. 
Fascism, it will be remembered, believes in the exist- 
ence of a conflict between capital and labor and has 
built up the Corporate State around two parallel sets 
of organizations, one for the employers and one for 
labor. But they are kept separate. Only in the 
councils of the corporations and other bodies and 
under the auspices of the State and the Party do 
they meet on a footing of equality. But Germany's 
National Socialism denies the existence of any con- 
flict of interests between capital and labor and has 
carried this principle into practice. The Law of Jan- 
uary 20, 1934, for the Organization of National La- 
bor declared that the owner of an enterprise was its 
leader, and that his employees were his followers 
iGefolgschaft), and that they all “worked together 
for the furtherance of the purposes of the enterprise, 
and for the benefit of the Nation and the State in 
General.” It has already been pointed out that in 
accordance with the National Socialist theory the 


employer is not a “hereditary enemy” of labor, but 
merely a coworker in the common enterprise. The 
employers were accordingly induced to join the La- 
bor Front (Arbeitsfront)," an organization that came 
into existence in the early summer of 1933 and ab- 
sorbed the former trade unions. This, however, was 
not deemed suflScient. On March 26, 1935, Dr. 
Schacht, the Minister of Economics, entered into an 
agreement with Dr. Robert Ley, the leader of the 
Labor Front, by virtue of which the Reich Chamber 
of Economics as a body joined the Labor Front. The 
members of associations represented in the Chamber 
of Economics, therefore, became members of the La- 
bor Front in a double capacity: individually, as 
leaders of industrial enterprises, and again, collec- 
tively — ^through the Chamber of Economics — ^which 
seems rather absurd. But, in addition to this meta- 
physical aspect the agreement also had certain very 
definite and important provisions. The Chamber of 
Economics became the Economic Department (Wirt- 
schaftsamt) of the Labor Front, which would seem 
to mean that no economic measures of any impor- 
tance can be taken by the Labor Front and its leader 
without the advice of the Chamber, which is subor- 
dinated to the Minister of Economics, Dr. Schacht. 
There can, for instance, be no increase in wages 
without his approval. As a connecting link between 
the Chamber of Economics and the Labor Front a 
special Labor and Economic Board (Reichsarbeits- 
und Wirtschaftsrat) came into existence. It is com- 
® See below, p. 136 sgc;. 


posed of the higher ofBcials of the two organizations, 
with the participation of the Minister of Economics 
and the Leader of the Labor Front. The purpose of 
the new Board is to cooperate with the Government, 
the Chamber of Economics and the Labor Front in 
deciding questions of economic and social policy. 

The agreement of March 26 was regarded by Dr. 
Ley as a great victory for labor and by all the official 
commentators in general as a striking manifestation 
of that national unity which overshadows almost all 
other preoccupations in the German mind today. Dr. 
Schacht celebrated the occasion by delivering an elo- 
quent speech on the same subject. Appropriately, 
he addressed his audience as “Meine deutscken 
Volksgenossen, Hebe Arbeitskameraden” But the 
unofficial comments in certain quarters would seem 
to indicate that the victory of Dr. Ley was not quite 
so complete as he professed to believe it, and that 
the position of business has been strengthened 
rather' than weakened by the agreement of March 
26. A distinguished German industrialist to whom 
I remarked that a double membership in the Labor 
Front would seem somewhat superfluous and that 
by joining it as individuals and again collectively 
German business was “more labor than labor itself^’ 
(plus royaliste que le roi), adjusted his monocle, 
sighed, and said that Germany was living through 
a revolution that was not merely national but also 
social; that the psychological effect of business join- 
ing the Labor Front was enormous; and that at the 
same time the interests of business were safeguarded 


by Dr. Schacht’s control over the economic activities 
of the Labor Front. It may be doubted whether this 
is a real safeguard. What matters in Germany today 
is the attitude of the Chancellor and the Party. It 
is only as an interpretation of this attitude that the 
changes in the organization of business acquire 
their real meaning. 


In Germany more than in Italy the rights of private 
property and individual initiative have been sub- 
jected to rather important limitations. By the Law 
for the Organization of National Labor, enacted on 
January 20, 1934, the owner of a business may be re- 
moved if he “abuses his authority ... by mali- 
ciously exploiting the labor of any of his followers 
(employees) or wounding their sense of honor.” In- 
stances of the removal of owners, I was assured, are 
rare but have nevertheless occurred, usually on the 
ground of “anti-social” conduct. For example, a 
baker in the Rhineland had trouble witk his em- 
ployees. His establishment was inspected and de- 
clared unsanitary. The owner was removed and re- 
placed by a trustee appointed by local authorities. 
The salary of the trustee was paid from the profits 
of the enterprise and the owner was entitled to what- 
ever was left. Such removals have also taken place 
on political grounds. No definite information as to 
the number of cases is available, but I was told that 
they represent merely a fraction of one per cent. 


Nevertheless the very possibility of such action exer- 
cises a strong pressure to prevent “anti-social” con- 

Another example. A foreign government invited 
bids for the building of a munitions factory. The 
German Government, which has invested large sums 
in the heavy industries, instructed the eligible firms 
not to submit bids below a certain figure. One of the 
firms disregarded this ruling and tendered a bid that 
was under the minimum set. The head of the firm 
was ordered to appear before a tribunal that con- 
sisted of the members of the Reichsgntppe. His con- 
duct was censured- He was permitted to continue 
in office but was warned that m case of any further 
disregard of official instructions his firm would be 
excluded from participation in government orders, 
which are considerable, and that he might be re- 
moved altogether. The threat of exclusion from 
government orders is usually sufficient to keep every 
one in line. The “trial” was a purely administrative 
measure and had no basis in law. 

The Law of July 15, 1933, gave the Minister of 
Economics the power to prevent the extension of 
the existing industrial plants, to revise cartel agree- 
ments already made, and to force individual firms to 
enter into cartels or other industrial combinations. 
The purpose of this legislation was to maintain a 
stable level of prices. A number of the suggested 
cartels were organized, for instance, those for glass- 
ware, newsprint, nails and springs, and other manu- 
factures. Some compulsory cartels were set up for 


only a short time to afford the industries concerned 
opportunities to reach voluntary agreements. In 
many instances the threat of compulsory carteliza- 
tion proved sufiBcient to prevent “unfair” competi- 
tion and underselling. And the Minister also made 
free use of his power to prevent further expansion 
of industrial plants when, in his opinion, the existing 
capacity was adequate to meet the demand. No busi- 
ness expansion was permitted without a government 
license. At the beginning these prohibitions applied 
to old-established industries. Later on, however, 
they were used in case of new industries on the 
ground that it was the duty of the Government to 
prevent mal-in vestment of capital. A large number 
of industries were affected by this policy, among 
them manufactures of textiles, electric cables, paper, 
radio receivers, rubber tires, cigarettes and many 
other things. In the case of the textile industry the 
prohibition on expansion ivas accompanied by a lim- 
itation of working hours to 36 a week, a measure 
designed to further the spread of employment. The 
Decree of July 16, 1934, prohibited the starting of 
machinery that had not been running for four weeks, 
unless it was accompanied by the stopping of ma- 
chinery of equal capacity. 

Department stores, it wdll be remembered, were 
among the institutions the abolition of which 
National Socialism had advocated as early as 1920. 
In 1931 their trade represented about 10 per cent of 
the entire retail output of the country, and that of 
the cooperative stores, about 5 per cent. National 


Socialism had always proclaimed its intention of de- 
fending the small traders against the competition of 
these large concerns which, moreover, were mainly 
in Jewish hands. The complete liquidation of de- 
partment stores, however, proved more difficult than 
was anticipated; for it became evident that it would 
inevitably lead to unemployment and the fi^t 
against that condition came first in the policy of the 
Hitler Government. The one-price and chain stores 
were also extremely unpopular with the National 
Socialists. By the Law of May 10, 1933, the opening 
of more such concerns was altogether prohibited, 
thus making permanent a measure enacted by a de- 
cree of the von Schleicher Government which for- 
bade the same thing for a period of 16 months. The 
Law of May 12, 1933, extended the prohibition to 
all retail establishments on the ground that they 
were already too numerous. In this case the pro- 
hibition was to last for only six months. But subse- 
quent legislation and the Law of September 13, 
1934, made the general measure permanent. No re- 
tail shop could be opened without a license. The 
issuance of such licenses was made dependent not 
only on the need of a new shop in the locality in 
question but also on the standing of the applicant, 
who must prove that he was properly qualified to 
enter the trade. In this way “undesirable elements” 
were to be completely excluded from retail trade 
since the requirement of a proper qualification ap- 
plied both to the opening of new establishments and 
likewise to the sale of those already in operation. 


The entire advertising business, as was indicated 
above, has, since the autumn of 1933, been under 
the strict supervision of the Advertising Council and 
the Ministry of Propaganda, and is subject to licens- 
ing on the ground of personal qualifications. 

A rather important restriction on the freedom of 
employers of labor was introduced in August 1934 
in connection with the unemployment program. 
Most of the employees under twenty-five years of 
age were to be dismissed and replaced by older peo- 
ple. Skilled workers and some who were married 
were exempted from the application of this measure. 
The dismissed workers were encouraged by various 
means to seek employment in agriculture. 

More significant was the Bank Reform Law of 
December 5, 1934. Since the banking crisis of 1931 
the German Government has been exercising a wide 
control over the entire banking system of the coun- 
try. It was the intervention of the State that saved 
German banking from complete collapse in 1931 and 
it left the Government with a controlling or a sub- 
stantial minority interest in four of the five largest 
banks. In 1933 a Bank Investigation Committee 
was set up to determine the causes of the recent 
banking crisis. Its report, which was published in 
November 1934 was looked forward to with much 
apprehension in financial circles. There was great 
relief, therefore, when the Committee declared itself 
against nationalization but in favor of a strict super- 
vision of the banking system. The Bank Reform 
Law of December 5, 1934, reaffirmed the provision 


of an earlier law which prohibited the opening of 
new credit institutions or new branches, and made 
them subject to license. The granting of a license, 
as in the case of retail trade, depended not only on 
the financial standing, but also on the business and 
moral qualifications of the applicant. The Law also 
provided for the establishment of a Bank Supervi- 
sion Board (Aufsichtsamt jur das Kreditwesen) 
which has very wide powers in dealing with the 
banking situation. The Board consists of the Presi- 
dent of the Reichsbank, a representative of the 
Chancellor, and some of the higher government offi- 
cials. One of its chief objects is to keep the banks in 
a liquid condition and to bring their policy into line 
with that of the Government. The Board of the 
Reichsbank, which used to elect its President, was 
abolished, and the President of the Reichsbank will 
now be nominated by the Chancellor. 

The right of German corporations to pay divi- 
dends was limited by the Law of March 29, 1934; 
this law, in turn, was made more drastic by the Law 
on Dividend Investment enacted December 4, 1934. 
In accordance with the latter legislation, the divi- 
dends payable to shareholders may not be greater 
than 6 per cent or, in certain cases, 8 per cent. If 
earnings rise above this figure the corporation must 
turn them over to the Golddiskonthank, which acta 
as a trustee for the shareholders and invests the sur- 
plus dividends in government loans for a period of 
three years. The sum so “loaned” will be turned over 
to the shareholders Hien. The reason for such legis- 


lation is the desire of the Government to strengthen 
its credit and to increase the funds at its disposal for 
fighting unemployment. The measure is moreover 
justified on the ground that the increased earnings 
of the corporations are not infrequently due to large 
government orders and to the investment of public 


It will appear from the above survey that indus- 
try, commerce, banking and other fields of economic 
activity, both in Italy and in Germany, have been 
subjected to a very advanced degree of government 
regimentation. It will be seen later that the hand of 
the State has made itself felt even more strongly in 
agriculture. We shall also have to review the truly 
formidable array of prohibitions and restrictions 
which have descended upon the business organiza- 
tions of the two countries as a result of the decline of 
their international trade, coupled with exchange dif- 
ficulties. It may be said in anticipation that such 
restrictive policies cannot be held to form an integral 
part of the program of the totalitarian State, but 
are dictated by considerations of expedience or, to 
be more exact, of dire necessity. On the other hand, 
the coordination of business activities, which took 
the form of the Corporate State in Italy and of the 
Chamber of Economics in Germany, where it has a 
peculiar relationship to the Labor IVont, is unques- 
tionably an attempt to carry into effect the princi- 


pies which the two movements are preaching. I have 
already pointed out that there are important and 
significant differences between the Italian and the 
German structures. Although Hitler has been in 
power for a much shorter period than has Mussolini 
the German methods of control and State interven- 
tion are probably more far-reaching and rigid than 
they are in Italy. But if there are differences, there 
are also important likenesses which may be consid- 
ered as typical of the character of the totalitarian 

A distinguished German official, with whom I was 
discussing the Chamber of Economics, explained to 
me that the whole structure of business control was 
really patterned after the army. It was built up 
around the principles of hierarchy, unity of com- 
mand and strict discipline which were expected 
eventually to produce that esprit de corps or com- 
mon will which Mussolini calls “corporate spirit.” 
The Italian Corporate State has a very similar foun- 
dation; and although it does not recognize the lead- 
ership principle of National Socialism, it believes in 
hierarchy, the rule of the elite and unity of com- 
mand. And for all practical purposes the difference 
between the appointed officials of today’s Germany 
and the “elected” officials of today’s Italy is very 
slight indeed. 

But this common will or corporate spirit which is 
to guide the institutions of the totalitarian State is 
something still to come. The whole organization de- 
pends at the present entirely on the Party, which is 


just as much the mainstay of the economic system 
as it is the pillar of the political regime. A move- 
ment which draws its ideology from the glorification 
of free cooperation and preaches the sacrifice of indi- 
vidual interests to those of the community main- 
tains itself in power by methods that have little to 
do with its own theories. Whatever may happen to 
the Italian Corporate State and to its German coun- 
terpart in the future, if and when the coming gener- 
ations develop the corporate spirit or assimilate 
the ideas of Gemeinschaft, at present conditions are 
far from ideal. Bureaucracy is abhorrent to Fascism 
and National Socialism, just as it is abhorrent to 
Russian Communism. In spite of that fact, however, 
it must be admitted that Italy and Germany have 
developed huge bureaucratic machines which may 
well be compared with that of the Soviet Union. 
There would seem to be a government bureau in 
every house in Berlin’s Tiergarten district, and in 
every second palazzo in Rome. The whole structure, 
as I have pointed out, is cumbersome and awkward 
in the extreme. It is true, however, that in this re- 
spect democracies can also make comparisons and 
have little to learn from dictatorships. Witness the 
luxuriant growth of bureaus and departments in the 
United States under the New Deal. The tortuous 
bureaucratic methods of Fascism and National 
Socialism are much resented by the business com- 
munity. The head of an Italian exporting firm, who 
was a member of the Fascist Party, described the 
interminable complications that surround the issue 


of an export license — even before the Ethiopian 
campaign — and added mournfully: “Now on top of 
all these are to come the corporations,” which did 
not augur well for the “corporate spirit.” And a 
German oflScial with whom I was exploring the ter- 
rifying chart depicting the ramifications of the Eeich 
Chamber of Economics, said apologetically: “We are 
living through an orgy of organization.” Strange 
things can happen to the spirit of free cooperation 
for the common good when it gets caught in the cogs 
of a powerful political organization. 



The approach of Fascism and National Socialism 
to the labor question is all the more interesting since it 
attempts to solve a problem that every advanced 
country, whatever its political complexion, has to face. 
It brings out, moreover, and in high relief, the per- 
plexing variety of elements that enter into the ideol- 
ogy of the two movements. The Italian Charter of 
Labor declares that “work in all its forms — ^intellec- 
tual, technical and manual — both organizing and 
executive is a social duty.” The program of the Na- 
tional Socialist Party, which preceded the Charter 
by some seven years, is just as emphatic. “The first 
duty of every citizen, says Article 10 of the program, 
“is to work either with brain or with hand.” This 
sounds dangerously like the well-known Communist 
slogan: “He who does not work, does not eat.” There 
is, however, no reason to be unduly alarmed because, 
as we know, Mussolini and Hitler quite as definitely 
deny the reality of the class struggle, the second 
fundamental principle of Communism, as they up- 
hold the duty to work. The Italian and German 
solution of the labor problem consists in trying to 
build up a relationship between employers and em- 




ployees which will eliminate once and for all the use 
of violent or “direct” methods in the settlement of 
labor disputes. The document, which embodies the 
principles of the Italian organization for the estab- 
lishment of everlasting peace in the field of labor re- 
lations, is the Charter of Labor, of which Mussolini 
was the author. Although, when issued in 1927, it 
was merely a party document it has since been given 
legal recognition by the Italian courts. The German 
counterpart of the Charter of Labor is the Law for 
the Organization of National Labor, enacted Janu- 
ary 20, 1934. In the present records of the respective 
countries these two acts occupy a place of honor 
akin to that of the Bible in Christian communities, 
Magna Charta in England, and the Constitution in 
the United States. While the German Law of Janu- 
ary 30, 1934, is relatively little known abroad, the 
fame of the Charter of Labor has long since spread 
over the frontiers of Italy and has attracted much 
attention, not always unsympathetic even in quar- 
ters where Fascism, as a whole, is not altogether 
popular. As happens only too often, a close exami- 
nation of the famous document adds but little to its 


Strictly speaking, the Charter of Labor is not 
really the Magna Charta of Italian labor, but rather 
the key link in a chain of legislation. Parts of it had 
already been enacted and additions were made later. 


This legislation laid down definite rules for the or- 
ganization of employers and workers in associations 
or syndicates, made compulsory the conclusion of 
collective labor contracts, prohibited strikes and 
lockouts, and for them substituted Labor Courts. 
This ^stem has its basis in the organization of em- 
ployers and workers in two separate groups of pro- 
fessional associations.^ It is only the legally recog- 
nized associations that are permitted to represent 
the employers or workers of a given category in any 
particular district and to conclude labor contracts. 
They act also for those workers and employers who 
are not members of the association. These provi- 
sions, together with the rules governing the organi- 
zation of associations, proved to be an effective 
means of bringing the entire labor movement under 
the close control of the Fascist Government and the 
Fascist Party. It will be remembered that the repre- 
sentation in an association of only 10 per cent of the 
entire number of people engaged in any professional 
pursuit is suflScient to enable it to obtain legal recog- 
nition, provided that the officers of the association 
are in good standing with the Government, and also 
that the "presidents” of the employers and the "sec- 
retaries” of the workers’ associations have been 
elected by their fellow members and confirmed in 
their offices by the Government. The broad and ex- 
clusive powers of the legally recognized associations 
have made perfectly illusory the high-sounding pro- 
nouncement of the Charter of Labor upon the com- 
* See above, p. 86 sqq. 


plete freedom of the syndicalist movement. And the 
confirmation of their officers by the Government 
made equally illusory that freedom of election of 
their officers whidi, legally, the associations enjoy. 
The result has been that the Italian labor move- 
ment, albeit it has behind it a long and troubled his- 
tory and a strong revolutionary tradition, has been 
driven into the straitjacket of Fascist controlled 
syndicates. This was undoubtedly a most important 
step toward the consolidation of the Fascist dictator- 
ship. Modem factories and plants, with their large 
aggregations of men and women workers who often 
have good reason for discontent with the casting 
social and economic order, are a potential revolu- 
tionary factor which no absolutist regime can afford 
to disregard. Mussolini had been long and closely 
connected with the Italian labor movement and 
knew well the revolutionary potentialities of syn- 
dicalism. The gathering of the workers’ syndicates 
into the fold of Fascism was therefore a decisive vic- 
tory and it made possible further e3q)eriments in 
labor legislation. 

The chief purpose of the entire comples system of 
corporate agencies set up in Italy is to eliminate 
labor disputes by subordinating the interests of the 
workers and the employers to the higher interests of 
the State and of the Nation. An important instru- 
ment for accomplishing this aim is the collective 
labor contract which is entered into by the associa- 
tions of employers and of workers and is compulsory 
for all employers and workers of any given category. 


The most troublesome question in the relations be- 
tween the employers and the workers is naturally 
the question of wages. The Charter of Labor, with 
that lack of precision which is so characteristic of 
Fascist legislation, declares that “wages shall be de- 
termined not by any general rules but by agreement 
between the respective parties to the collective con- 
tract.” If, however, there should be a disagreement 
as to wages, it shall be brought up first for concilia- 
tion before the associations and then, conciliation 
failing, for decision before the labor court. The court 
“will guarantee that wages shall correspond with the 
normal demands of life, with the possibilities of pro- 
duction, and the output of labor.” In his illuminat- 
ing and exhaustive study of the labor policies of the 
Fascist regime a distinguished French writer, M. L. 
Rosenstock-Franck, has made clear how superficial 
and shallow is this statement which cannot and does 
not give any real guidance to the labor courts. How 
is the court to determine what are the “normal de- 
mands of life” of the workers, what are “the possi- 
bilities of production,” and what is the “output of 
labor?” And how is it to reach an equitable decision? 
To none of these all-important questions do the La- 
bor Charter, subsequent legislation, or any decision 
of the courts themselves give an answer. The courts 
would seem to be guided merely by expediency, the 
exigencies of the political situation and the pressure 
brought upon them by the Government and the 

It is claimed that, in order to be effective, a collec- 


tive contract must be comprehensive, that is, it must 
apply to all the workers engaged in any particular 
pursuit; that it must cover every essential element 
in the relations between employers and workers; and 
that it must be stable, Le., it must give assurance of 
a certain permanency in the existing relations be- 
tween the two parties. In Italy the first of these re- 
quirements is achieved, to repeat, through the pow- 
ers that the legally recognized associations possess to 
enter into contracts binding on all employers and 
workers in any given categoi^. The serious draw- 
back of such an arrangement is that it makes it nec- 
essary to base the scale of wages on the output of the 
enterprises that are the least efficient, with conse- 
quences particularly unfavorable to the interests of 
the workers in the case of contracts effective on a 
national scale. It is true, however, that the conclu- 
sion of collective contracts does not preclude the 
conclusion of private agreements between employers 
and workers, provided that the stipulations of such 
agreements are not less favorable to labor than 
those of the collective contract. Italian legislation 
lays down definite rules as to the contents of labor 
contracts. Some of them present welcome innovar 
tions and are distinctly favorable to labor. In addi- 
tion to provisions relating to wages, methods of 
their payment, and hours of labor, each collective 
contract must determine the weekly holiday, annual 
vacations, the amount of relief to be given the 
worker in case of illness, the indemnity to be paid in 
case of his dismissal through no fault of his own, and 


the indemnity to be paid to his family in the event 
of his death. Every contract must be submitted for 
approval to the Prefect or the Ministry of Corpora- 
tions and is not valid until it has been published. 
Any infringement of the provisions of the collective 
contract is punishable by a fine and the offender is 
liable for such damages as may result to the party 

The law also specifically provides that every col- 
lective contract must be concluded for a definite 
period of time and that its provisions must be ob- 
served until the expiration of its term, thus guaran- 
teeing a certain stability in the relations between 
employers and workers. There is, however, a very 
important exception to this rule. According to Arti- 
cle 71 of the Law of July 1, 1926 “action for the for- 
mulation of new labor conditions is permitted even 
when a collective contract has been stipulated, and 
prior to the date of its expiration, provided a con- 
siderable change has occurred in the actual condi- 
tions since the date of execution.” M. Rosenstock- 
Franck has assembled a number of instances of such 
revisions, which have been demanded and made 
sometimes only a few weeks after the conclusion of 
the collective contract. The “considerable change in 
actual conditions,” on which these demands were 
based, was the result of the economic diflBculties in 
which Italy found itself in the period following 1927, 
in consequence of the revaluation of the lira on what 
is now generally believed to have been too high a 
level and, after 1929, in a time of world-wide depres- 


sion. The employers were naturally in a position to 
produce strong and convincing arguments in favor 
of the reduction of wages, which are a heavy item 
in their costs; and the general level of wages, al- 
ready appallingly low, was reduced in some cases by 
as much as 20 or 25 per cent, or even more. Accord- 
ing to M. Rosenstock-Pranck real wages declined 
between 1927 and 1930 by from 15 to 20 per cent. 
Syndicalist discipline certainly deserves credit for 
the resignation with which these heavy cuts were 
accepted by labor. The Fascist press unanimously 
acclaimed the magnificent spirit of sacrifice made 
evident when Italian workers were willing to disre- 
gard their immediate interests and to put them be- 
low those of "national production.” 

All lockouts and strikes are prohibited by the Law 
of April 3, 1926. The same law defines a lockout as 
the closing of a plant "without justifiable motive, 
and for the sole purpose of obtaining from the em- 
ployees a revision in the existing labor agreements.” 
A strike is defined as an abandonment of work by 
three or more employees, "by preconceived agree- 
ment.” Both these definitions leave ample room for 
interpretation in the courts. Direct action by labor 
being thus eliminated, the Italian legislation pro- 
vides that aU labor disputes must be settled by con- 
ciliation or by the labor courts. The element of con- 
ciliation is strongly stressed and no action can be 
brought before the court unless attempts at concilia- 
tion have first been made through the association or 
the Ministry of Corporations. The labor courts are 


attached to every district court of appeal and con- 
sist of three judges. The judges are assisted by two 
experts selected from a special list. These labor 
courts are described by official Fascist writers as 
courts of equity, and they have to be guided by the 
familiar principle of protecting above all the “supe- 
rior interests of production.” The jurisdiction of the 
courts extends to all labor disputes, both collective 
and individual, when the latter arc the outcome of 
a collective contract. One of their important and 
thorny tasks is to determine the “actual conditions 
of labor,” which really means wages, in the absence 
of a collective contract or when such a contract has 
been revised. I have already mentioned the extreme 
difficulties presented by this problem. M. Rosen- 
stock-Franck is right, I think, when he maintains 
that the decisions of the labor courts are based on 
political considerations and have little to do with 
the intricate economic questions w'hich affect wages, 
cost of production, and so on. 

A word must be said about the employment 
offices. These offices are attached to the local syndi- 
cates of workers. Employers are under an obligation 
enforced by severe fines to hire workers only through 
the agency of the employment office. The unem- 
ployed are under a similar obligation to register with 
the local office. Employers must accept the workers 
who are sent to them by the employment offices, 
and preference is given to men who are members of 
the Fascist Party or of the Fascist S3aidicates. 

The machinery for the settlement of labor dis- 


putes outiined above has worked fairly satisfactorily 
in the sense that strikes and lockouts have practi- 
cally disappeared, which in itself is no mean achieve- 
ment. The reason for this marked change from the 
conditions which prevailed before the passing of the 
legislation of 1926 and 1927 lies perhaps not so much 
in the perfection of the machinery itself as in the 
effectiveness of the control exercised by the Fascist 
Party over both employers and labor. They are rep- 
resented in labor disputes by the presidents and sec- 
retaries of their respective associations who, though 
“elected,” are also confirmed in office by the Govern- 
ment. The judges are appointees of the Govern- 
ment. The list of experts who assist the judges is 
carefully selected by Fascist controlled organizations 
and approved by the president of the court of ap- 
peal. Most of them are members of the Party and 
are bound by Party discipline. Decisions are put 
into effect by the associations under the supervision 
of presidents and secretaries who are Party mem- 
bers. This goes a long way to explain why labor 
accepts without much outside sign of discontent 
heavy cuts in wages, which would certainly lead to 
violent outbursts in a democratic country. This is 
what is called in Italy “Fascist discipline.” One 
should not imagine, however, that the labor courts 
always take the side of the employers. Fascist radi- 
calism is by no means dead, and many of the leaders 
of the movement, from Mussolini down, have long 
been ardent champions of labor. If the decisions on 
wages in recent years have largely gone against labor 


this has been in consequence of Italy’s unfortunate 
economic position. But in not a few instances the 
courts have favored labor against employers, and, in 
particular, they have taken a very lenient view of 
minor strikes. The conclusion to be drawn would 
seem to be that labor disputes are decided in Italy 
not so much by applying principles of equity, as by 
those of the Fascist policy of the day. And, again, it 
is the powerful hold of the Fascist Party that makes 
possible the enforcement of the decisions of the 


“Since we have had the Charter of Labor,” wrote, 
in 1927, Giuseppe Bottai, one of the most enthusias- 
tic supporters of the Corporate State and at one 
time Minister of Corporations, "there have been no 
limits to the possibilities of increasing the material 
and moral well-being of the individual.” The actual 
condition of the working masses for whose benefit 
the Labor Charter was devised would hardly justify 
this statement. But Fascist writers were never con- 
spicuous for moderation in the use of superlatives. 

In approaching the economic position of Italian 
labor two important considerations should be borne 
in mind. The first is that in Italy the economic level 
of the working classes has always been shockingly 
low; and the second, that the introduction of Fascist 
labor legislation coincided with the beginning of the 
depression which made itself felt in Italy earlier than 


in other countries as a consequence, to repeat, of the 
revaluation of the lira on too high a basb in 1927. 
For neither of these two factors can the Fascist Gov- 
ernment be held responsible, although the revalua- 
tion of the lira was, of course, its own work. In any 
case, though a lower valuation of the lira in terms of 
foreign currencies would undoubtedly have helped 
Italian foreign trade, it could not have nullified the 
unhappy effects of world depression to any substan- 
tial degree. 

Statistics of wages and indices of the cost of living 
must always be used with caution, and Italian sta- 
tistics have sometimes been severely criticized. They 
make no secret, however, of the fact that the level 
of wages has remained extremely low. In 1930 the 
average hourly pay of an mdustrial worker was 2 
lire and in 1934 had declined to 1.66 lire; * the in- 
dices of the cost of living for the same years were 
respectively 430 and 336 (January-June of 1914 = 
100). The hourly wage of a male agricultural laborer 
in 1930 was 1.49 lire and of a female, 0.86 lire; in 
1934, the figures had fallen to 1.13 and 0.66. The 
index of real wages of the same workers was 157 in 
1920-1924, 149 in 1930 and 143 in 1934 (1913- 
1914 = 100). The actual reduction of wages was, 
however, larger than would be indicated by these 
figures, because the number of working hours also 
declined. In the autumn of 1934 Mussolini took 
energetic measures to reduce unemployment, which 
was assuming menacing proportions. Addressing the 

* The parity of the lira to the depreciated dollar is 8 j 9 ceala. 


workers of Milan in October he promised them 
that “social justice” would be the keynote of the 
Thirteenth Year of Fascism (November 1934^0cto- 
ber 1935). The fulfillment of this pledge took the 
form of an agreement between the national confed- 
erations of employers and workers which provided 
for the introduction of Ihe 40-hour week in all 
branches of industry. Overtime work was prohibited, 
the employment of women and boys was to be lim- 
ited to such work as they were specially qualified to 
do; persons in receipt of pensions or retirement ben- 
efits were to be superseded by unemployed workers 
who had no incomes. The effect of this job-sharing 
could not be other than to reduce still further an al- 
ready meager wage. At the hourly rate of 1.66 lire 
an industrial worker employed 40 hours a week 
would earn 66.40 lire, or, at the gold parity of the 
lira, about $6. The earnings of agricultural laborers, 
as we have seen, are considerably lower, those of 
women amounting to less than one-half of those of 
a male industrial worker. To convert the wages of 
Italian labor into dollars is not a sound procedure. 
Nevertheless it helps to illustrate the undeniable and 
well-known fact that the economic standards of 
wage-earners are appallingly low. Fascism, so far, 
has failed to remedy this situation. 

In Italy unemployment never was a problem of 
quite the same magnitude as in the United States, 
England or Germany. It is, moreover, subject to 
very strong seasonal fluctuations, declining in the 
summer and rising sharply in the winter months. In 


recent years unemployment has shown an alarming 
tendency to increase, a phenomenon observable in 
every country. From the low level of 193,000 in 
June 1929 the number of registered unemployed had 
risen to 1,229,000 in February 1933. In January 1934 
there were 1,158,000. A work-sharing program on 
which the Government embarked in October 1934 
and a revival of industrial activities connected with 
the East African expedition and the drafting of 
many men resulted in a substantial decrease in the 
number of the unemployed, although this reduction 
proved to be less than might have been expected. 
This is explained by the fact that many of the em- 
ployers did not replace the drafted men. At the be- 
ginning of July 1935 the unemployment figure was 
still as high as 638,000, which was considerable for 
that time of year, and higher than the correspond- 
ing figure for 1931, although it was some 200,000 
less than the figure for June 1934. There are prob- 
ably also a number of unemployed who escape regis- 
tration, but how many cannot be accurately deter- 

Unemployment insurance, which was introduced 
in 1919 and reorganized in December 1923, cannot 
be considered as adequate. It is compulsory for in- 
dustrial workers earning less than 800 lire a month, 
but does not include agricultural laborers who num- 
ber about 2,000,000. The amount paid to the unem- 
ployed is very small, and no provision is made for 
dependents. Eligibility to draw unemployment in- 
surance is likewise surrounded with many legal 


restrictions which reduce considerably the number 
of the beneficiaries. The proportion of the unem- 
ployed who actually receive payments on account of 
unemployment insurance is estimated at something 
like 25 to 30 per cent of the total. 

As a measure of unemployment relief the Govern- 
ment has embarked on an extensive program of pub- 
lic works which provides for land improvements, 
housing, electrification, road building and archieo- 
logical excavations. In 1934, 86 million days of 
work were created, and employment was provided 
for a daily average of 289,000 workers. For the same 
year the Public Work Office appropriated over 1,000 
million lire for public works undertaken by the 
State, and- this sum did not include the amounts 
spent by independent offices — some of them also en- 
gaged in road building, land reclamation, and pro- 
vincial and municipal enterprises — ^isffiich were con- 
siderable. For a poor country such as Italy this rep- 
resents a very great financial effort, although it will 
hardly impress an American reader used to the gi- 
gantic figures given out every day under the New 

If Fascism has not succeeded so far in contribut- 
ing to the improvement of the economic position of 
the worker it has been very active in social work. A 
Maternity and Child Welfare Organization was es- 
tablished in 1925. An Institute of Social Insurance 
helps the beneficiaries under the various social in- 
surance systems to obtain the payments to which 
they are entitled, and endeavors to make the work- 


ing of social insurance smoother and more equitable. 
Much has been done in the field of public health and 
sanitation where Italy has always been notoriously 

The most important and probably the most suc- 
cessful of the Fascist social ventures is the great or- 
ganization for recreation and sports, the Dopolavoro 
(“After Work”) which, at the beginning of 1935, 
had more than 2,000,000 members. It is open to all 
workers and employees. For a very small fee they 
are entitled to the benefit of all its cultural and rec- 
reational activities. There is a Dopolavoro group in 
every workshop, factory and public administration 
ofiSce in the country. In addition to facilities for 
sports and exercise, the Dopolavoro sponsors activi- 
ties that are literary, musical or theatrical; it or- 
ganizes excursions, maintains libraries and provides 
its members with tickets at greatly reduced rates for 
concerts, moving pictures and theatrical perform- 
ances. The Dopolavoro also furnishes medical at- 
tendance at a mere fraction of the normal fees. No 
less active is the Opera Balilla, an organization 
which concerns itself with the young people and 
brings them up in the true spirit of Fascism. In 1934 
it had some 4.3 million members. The Balilla main- 
tains a wide network of summer colonies on the sea- 
shore and in the mountains, where practically every 
young Italian today gets a chance to spend a few 
weeks; and this cannot but be beneficial to his body, 
whatever may happen to his mind. This effort on 
behalf of the coming generation in a country where 


devotion to children is exceptionally strong is by no 
means an unimportant factor in reconciling the peo- 
ple to many of the hardships of their existence and 
in rallying them to the support of the regime. 

The Decree of June 20, 1935, provided for the insti- 
tution of the “Fascist Saturday.” All wage-earners, 
including government employees — with a few speci- 
fied exceptions, such as the public utilities and other 
services that cannot conveniently be interrupted — 
must terminate their work on Saturday not later 
than 1 p.M. The total number of hours per week 
is not reduced, and the hours made free on Saturday 
are to be compensated for by extra hours on other 
days without extra pay; collective labor contracts 
are to be amended accordingly after consultation 
with the Secretary of the Fascist Party. The “Fas- 
cist Saturday” is to be devoted to military exercises, 
and to sports and activities of political, vocational 
and educational character. How extensive is the 
program of such activities appears from the fact that 
not only Saturdays but also Sundays are filled with 
them. The decree specifically provides that at least 
one Sunday per month must be free from all offi- 
cial or semi-official engagements. 

M. Rosenstock-Franck, an outspoken critic of 
Fascism, expresses the opinion that in Italy the mat- 
ter of salary has lost something of its importance 
since life in common has been occupying an ever- 
increasing amount of the worker’s time. It is on the 
State and the Party that he largely depends today 
for his recreations, and the State and the Party see 


to it that they are handled in the proper spirit. 
“Nothing is more certain,” \\Tites M. Rosenstock- 
Franck, “than that these social organizations will 
ensure the harmonious physical development of the 
Italian race; and it is just as true that they will 
strengthen those moral virtues which grow out of 
team work (vjc d’eguipe) — audacity, self-sacrifice 
and gaiety. But they have killed all possibility of 
political education.” If this analysis is correct Mus- 
solini has arrived at one of his chief objectives. 


The labor policy of National Socialism developed, 
as was to be expected, along lines similar to those 
of Italian Fascism, with certain characteristic devia- 
tions due largely to the already familiar difference 
in the attitude of the two movements toward the 
class struggle. This difference, to repeat, consists in 
the acceptance by Fascism of the existence of a con- 
flict of interests between capital and labor, a con- 
flict which is completely denied by National Social- 

“If in the future we are asked the question, What 
do you consider your greatest achievement?” Hitler 
declared in October 1933, “I can only answer: We 
have been successful in restoring the German worker 
to the Nation.” The first step toward this object 
was the destruction of the German trade union 
movement which has in the past been the strong- 
hold of the Social Democrats and, to a lesser degree, 


of the Communists. Preliminary measures with that 
object had been taken even in the days of the Wei- 
mar Republic, when the National Socialist Party 
had proceeded to establish a National Socialist Cell 
Organization (Nationahozidlistische Betriehszellen 
Organisation) which would fight the trade union 
movement from within. Early in May 1933 after 
the rise of Hitler to power, all the existing trade 
unions were taken over by the National Socialists 
and incorporated in one vast organization known as 
the Labor Front (Deutsche Arbeitsfront), under the 
leadership of Dr. Robert Ley; and his personal ini- 
tiative, it would seem, had gone far toward giving 
the trade unions their coup de grace. Within the La- 
bor Front, however, the trade unions, whose number 
has been greatly reduced through reorganization, 
continue to retain their identity. The former lead- 
ers of the trade unions were, of course, removed and 
not a few of them found themselves behind prison 
bars or in concentration camps. The Labor Front is 
much more than a mere professional association. 
It is officially described as the “organization of 
Germans engaged in productive work, whether of 
brain or hand” (Organisation der schaffenden 
Deutschen der Stim und Faust). It comprises there- 
fore not only workers and employees but also, as we 
know, all employers of labor, small artisans and 
members of liberal professions. Membership in the 
Labor Front, which is closed to non-Aryans, is a nec- 
essary qualification for any position in Germany to- 
day. The few loopholes that were left open in the 


early months of the regime have been rapidly closed. 
No wonder that in the beginning of 1935 the Labor 
Front had, by official estimate, 23 million members, 
while the 169 trade unions and their federation in 
1932 had merely a rough 5 million members. The 
organization of the Labor Front, which is one of 
extreme complexity, is still very much in a condition 
of flux, and is being constantly remodelled. I was 
told so at its headquarters in Berlin in the summer 
of 1935. It closely follows the structure of the 
National Socialist Party. An official description is- 
sued at the end of 1934 states that the organization 
of the Labor Front is based on the idea of the su- 
premacy (Primat) of the Party. The flrst aim of the 
Labor Front is the “ideological education of its 
members in National Socialism.” The fleld of its 
economic activities is less well defined, and the mat- 
ter has not been made simpler by the incorporation 
in the Labor Front of the Reich Chamber of Eco- 
nomics. But one thing is certain: the National So- 
cialist Party controls the labor organizations of Ger- 
many as completely as the Fascist Party controls 
labor in Italy. The Labor Front, moreover, is based 
on the principle of leadership, that is, the appoint- 
ment of all officers by their respective superiors, 
although the difference between this system and the 
Fascist “elections,” followed by official approval of 
the candidates, is for all practical purposes nil. 

The dependence of labor on the government has 
been further increased by two legislative measures 
enacted early in 1935. The Law of February 26, 1935, 


provided for the introduction of “labor passports” 
(Arbeitsbiicher) the purpose of which was stated to 
be “a more rational distribution of labor through 
Germany’s economic system.” The labor passport, the 
introduction of which has been left to the discretion 
of the Ministry of Labor, will contain a complete 
record of the worker’s career. It was believed that 
this measure would first be applied to industries con- 
nected with the national defense and would thus 
make easier the mobilization of industry in case of 
some military emergency. The second law empow- 
ered the Minister of Labor to order employers to 
dismiss all workers who were formerly employed in 
agriculture; the desired effect was, first, that the lat- 
ter would be forced to return to the farms thus less- 
ening the shortage of skilled agricultural labor, and, 
second, that new jobs would be created in industrial 
centers where unemployment was particularly 
marked. These measures tend to curtail the freedom 
of the worker to choose the kind of labor that he 
likes best. 

The Law of January 20, 1934, for the Organiza- 
tion of National Labor, which consolidated a num- 
ber of legislative measures enacted during the pre- 
ceding months, is probably the most characteristic 
document dealing with social policies that has so far 
come from the Hitler regime. It represents a practi- 
cal attempt to carry into the troubled field of indus- 
trial relations that principle of national solidarity 
and classlessness which is the very essence of Na- 
tional Socialist ideology. The Law completely re- 


jects the familiar conception that employers and 
employees are two elements in the process of pro- 
duction whose interests are frequently in conflict. 
"In every enterprise,” says Article 1, "the owner, as 
the leader (Fiihrer) and the salaried or wage-earn- 
ing employees, as his followers (Gefolgschaft), shall 
work together for the furtherance of the purpose of 
the enterprise and for the benefit of the Nation and 
of the State.” The leader is to make the decisions 
“in all matters that affect the establishment. He 
shall promote the welfare of his followers. The lat- 
ter shall be loyal to him as fellow members in the 
common enterprise (^Betriehsgemeinschatft)” This 
principle of cooperation finds its practical expression 
in the creation of a shop council (V ertrauensrat) 
consisting of not less than 2 and not more than 10 
men representing the workers. The qualifications 
and method of election of these delegates (Vertrau- 
ensmdnner) are highly characteristic. The candi- 
date must be "a member of the Labor Eront, possess 
exemplary qualities as a man, and must have given 
definite proofs of his unreserved devotion to the 
• National Socialist State.” -The list of candidates is 
prepared by the owner and must be approved by the 
leader of the National Socialist Cell. It is then sub- 
mitted to the vote of the workers, who may approve 
or reject it. In case of rejection the council is ap- 
pointed by the Labor IVustee (Treuhdnder der 
Arbeit). The duties of the council are to “strengthen 
mutual confidence within the enterprise and also to 
participate in the elaboration of measures designed 


to increase the efficiency of the concern. It must 
likewise take part in the preparation of shop rules 
and in the settling of disputes that may arise within 
the establishment, and also in promoting the welfare 
of the workers.” The Law provides for a new official, 
the Labor Trustee, an office which was first estab- 
lished by the Law of May 19, 1933. The Labor 
Trustees, one for each industrial subdivision of the 
Reich, are appointed by the Government. Their 
chief task is “the maintenance of industrial peace.” 
They also have jurisdiction in such matters as the 
dismissal of workers and the organization of shop 
councils. They supersede the owner of the enter- 
prise in the decision of rates of wages, if the scale 
“appears to be incompatible with the economic and 
social conditions of the establishment.” 

A noteworthy innovation in the Law is the crea- 
tion, in every labor trustee district, of a “court of 
honor” (Ehrengericht) consisting of a judiciary offi- 
cer, appointed by the Minister of Justice, and two 
assessors — one an employer and one a member of 
the shop council — selected from a special list pre- 
pared by the Labor Front. These courts have juris- 
diction over offenses that are considered a breach of 
“social honor.” According to the Law every em- 
ployer or worker “shall conduct himself in such a 
manner as to show himself worthy of tlie respect due 
to him as a member of the common enterprise. In 
particular he shall devote all his powers to the serv- 
ice of the establishment and the common good, al- 
ways bearing in mind his responsibility.” A breach 


of these obligations makes the offender liable to an 
appearance before the court of honor. A specific 
instance, mentioned in the Law, is in the case of the 
employer, “abuse of his authority by maliciously ex- 
ploiting labor or wounding the sense of honor of the 
workers.” In the case of the workers the Law refers 
particularly to “activities endangering industrial 
peace,” “frivolous and unjustifiable complaints to 
the labor trustee,” “intentional and unjustifiable in- 
terference of shop council delegates with the work of 
the enterprise and malicious disturbance of the 
community spirit,” and, finally, “disclosure by shop 
council delegates of professional and trade secrets 
and confidential information.” Penalties imposed 
by the courts of honor include warnings, reprimands, 
fines up to 10,000 marks, removal of the owner and 
dismissal of the employee. There is a right of appeal 
to a special court of appeal. The Law also contains 
a number of elaborate provisions designed to protect 
the worker from abrupt and unjustified dismissal. 

The Law of January 20, 1934, behind its roman- 
tic, untranslatable and somewhat naive phraseology 
glorifying the spirit of common endeavor, discloses 
the same preoccupation of the legislator observable 
in every important measure of Fascism and National 
Socialism — ^insistence upon the Partjr’s absolute and 
supreme control of the entire machinery for the set- 
tlement of labor disputes. Employers and labor are 
unreservedly at the mercy of political appointees, 
such as labor trustees, members of the courts of 
honor, and delegates to the shop councils. The work- 


ers have lost the right of collective bargaining and 
the right to strike. The employer secs his hands tied 
by the constant supervision of representatives of the 
National Socialist Party and knows that he can be 
removed at any time for “malicious abuse of his 
authority.” His freedom to establish wages has, in 
practice, remained a dead letter. Although the elab- 
orate system of collective labor agreements that 
existed before 1933 was officially discarded, wages 
have, in general, been maintained on the old level 
by the decisions of the labor trustees. As in Fascist 
Italy, the radicalism of National Socialism is by 
no means dead and the employers are aware of the 

Information on the practical working of the ma- 
chinery is scarce. Open labor disputes are definitely 
a thing of the past. The elections to the shop coun- 
cils that took place in April 1934 were — though it 
became known only in 1935 — not too encouraging 
for the regime. Only 40 per cent of the workers 
took part in the voting and many councils had to be 
appointed by the labor trustees. In the election of 
April 1935, however, about 80 per cent of the total 
number of workers and employees came to the polls 
and 83 per cent of them voted for the lists submitted 
by the employers. Under pressure, no doubt, but 
the machinery seems to work. 

Information as to the working of the courts of 
honor is also meager. Between May 1, 1934, when 
the new law went into operation, and January 1, 
1935, 61 cases have been referred to these courts. Of 


this number 56 were brought against employers, and 
only 5 against wage-earners. Of these 6, 3 were 
against executive officers (Aufsichtspersonen). Of 
the 56 cases against employers 22 were based on 
alleged offenses against the honor of the employees, 
15 on “exploitation” of labor, and the balance on 
disregard of written orders of the labor trustees. 
Only 13 cases were decided before January 1, 1935. 
In 3 instances the employers were disqualified for 
further control of their businesses; and in 2 wage- 
earnera (it is not clear whether they were executive 
officers or workers) were dismissed. The other cases 
resulted in fines and lesser penalties. The number of 
cases is too small and the courts have been in operar 
tion for too short a time to offer a basis for general- 
izations, but the nature of the few decisions so far 
rendered has probably contributed to the stimula- 
tion of the National Socialist zeal of the employers. 


The striking growth of the Hitler movement since 
1929 has in no small degree had its source in the eco- 
nomic and industrial condition of Germany in the 
years of the depression. National Socialism was 
actively supported by the unemployed, especially by 
the younger generation, whom the Fiihrer had prom- 
ised, with all the power of his savage eloquence, to 
show a way out of the bleakness of the present into 
a brighter future, where places will be assured for 
every man and woman willing and able to work. The 


struggle against unemployment and, even more — ^its 
complete wiping out — ^has been both the watchword 
and the set policy of the regime since it came into 
power. The leader of the Labor IVont, Dr. Ley, 
declared in a speech in the spring of 1935 that before 
May 1, 1936, unemployment in Germany will have 
wholly disappeared. Hitler, addressing untold thou- 
sands of his countrymen at the Tempelhof demon- 
stration of May 1, 1935, was more cautious. He 
merely promised that the Government would con- 
tinue its struggle against unemployment until no 
longer should there be anyone without a job. 

The Germans claim that the great effort made by 
the coimtry to provide work for a very large number 
of its citizens W been crowned with complete and 
unqualified success. Official figures show a decline 
in the number of unemployed from over 6 million 
on January 30, 1933, to 1.7 million on September 1, 
1935. According to a statement issued by the Ger- 
man Institute for Business Research (Institut fur 
Konjunkturforschung) the struggle against unem- 
ployment up to September 1935 may be divided into 
four periods. (1) From the autumn of 1932 to the 
middle of 1933 the industrial situation began to 
show improvement, indicating that the low point of 
the depression had been passed. The first measures 
to create employment, taken by Hitler’s predeces- 
sors, resulted in an increase in employment that 
averaged 67,000 a month. (2) The second period, 
covering about a year, from the middle of 1933 to 
the middle of 1934, gave an average monthly in- 



crease in employment of some 168,000 and made 
plain the full effect of the Hitler employment pro- 
gram. (3) The third period, from the middle of 1934 
to November 1934, was characterized by a slowing 
down of the increase in the growth of employment, 
which at that time averaged 69,000 a month. (4) 
The fourtii period, from November 1934 to Septem- 
ber 1935, showed a new revival in the increase of 
emplo 3 mient, which was due to the launching of the 
Government’s armament program. Its results have 
been felt with especial strength since the spring of 
1935. As computed by the Institute for Business 
Research, the total of regular emplosnnent has in- 
creased from 11,470,000 in January 1933 to 16,350,- 
000 in July 1935. To this must be added 560,000 
who were occupied in substitute employment (“land- 
helpers," the Labor Service, emergency and relief 
workers) which, for July 1935, gives a grand total 
of employment of 16,910,000. The corresponding 
figure for January 1933 was 11,730,000, thus giving 
a net increase in emplo 3 Tnent of some 5.2 million. 
The Institute for Business Research also points out 
that the number of emergency and relief workers 
(Notstands- und Fursorgearbeiter) has declined from 
the high mark of 660,000 in March 1934 to the new 
low level of 200,000 in August 1935. According to 
the same authority the original projects, which have 
been mainly responsible for the rise in employ- 
ment, are now being gradually completed, and their 
place is being taken by the new rearmament orders. 
The transition from employment projects to re- 


armament, we are told, occurred without any serious 
friction since both affect employment in much the 
same way. It may be added that they are also 
financed from the same source, that is, by the Gov- 
ernment. The Institute, moreover, ventures the 
opinion that employment has already reached a high 
level, and that an increase of unemployment, rather 
than a further decrease, is to be expected in the com- 
ing months, as a partial consequence of the suspen- 
sion of seasonal work in the course of the winter. 

I am aware that German statistics of employment 
and unemployment have been subject to severe crit- 
icism and that their reliability has been questioned, 
not only by German emigres but also by so author- 
itative a publication as the London Economist It is 
impossible for me to go into the details of this con- 
troversy, in which the difficult question of “invis- 
ible” unemployment plays an important part. I 
have, nevertheless, taken considerable pains to as- 
certain the validity of the German figures, and have 
obtained the advice of some of the experts who used 
to be closely connected with the official German 
statistical agencies but were forced to leave the coun- 
try on the establishment of the Hitler regime. I had 
also the benefit of the opinion of a foreign observer 
residing in Germany whose business it is to follow 
the economic development of the country. On the 
ground of information thus obtained I came to the 
conclusion that German employment and unem- 
ployment data are reasonably reliable, and that they 
at any rate give a fair picture of the general trend. 


even if the accuracy of some individual figures may 
be questioned. I see no reason, therefore, to doubt 
the large decrease in unemployment. Indeed, even 
if all statistics be put aside, increase in employment 
is suggested by the Government’s present vast em- 
ployment and rearmament program. 

In dealing with unemployment the Government 
showed much determination and resourcefulness. 
The backbone of its employment program consisted 
of public works, including housing, highway con- 
struction, land reclamation and other projects. And, 
since the end of 1934 rearmament has loomed large 
in the picture. The Labor Service has for two years 
given employment to something like 500,000 men. 
The “Land-helpers” (Landkilfe), young workers 
chiefly from industrial areas, who receive a nominal 
wage and upkeep, are sent to assist the owners of 
medium-sized farms. In the fiscal year 1934-1935 
their number was estimated at 160,000. Various 
measures have been introduced to encourage work- 
sharing. A limitation of the use of machinery in cer- 
tain industries such as cigar and button making and 
Thuringia’s glass industry, have been brought about 
by “voluntary” resolutions under official pressure. 
The same principle has made practicable ilie em- 
ployment of the largest possible number of men by 
reducing to a minimum the use of machinery in 
public works. A revision of the income tax law per- 
mits the owners or directors of industrial plants to 
omit from their tax totals sums spent on the pur- 
chase of “short-lived” equipment, or, more exactly. 


equipment that probably would not last for more 
than five years. The purpose of this measure was 
to put a premium on immediate purchase of such 
equipment and thus increase employment. Employ- 
ment of extra domestic ser\fants was encouraged by 
making a special income tax allowance for any new 
servant so employed. The Government also enacted 
a number of measures providing for the substitution 
of male labor for female. There was no actual pro- 
hibition of the employment of women; but girls who 
gave up their positions and married received a loan 
of 1,000 marks from the Government, and the loan 
became a gift if she had children. This was a meas- 
ure that also contributed to the revival of the furni- 
ture and household equipment industries. As for 
government employees and ofiBcers of public util- 
ities, it was made obligatory on them to prevent 
their wives and children from taking employment. 

In its desire to reduce unemployment the Govern- 
ment went so far as to sacrifice some of its most 
sacred principles. The campaign against depart- 
ment stores and even for a time, against some of the 
Jewish firms, was slowed down when it was realized 
that such a policy would necessarily lead to an in- 
crease in the number of the jobless. Dr. Goebbels 
resigned himself to tolerate a flagrant violation of 
one of National Socialism’s ethical first principles, of 
which he is the custodian. Dr. Goebbels, as has been 
said, controls through the Reich Chamber of Cul- 
ture and the Advertising Council, the entire busi- 
ness of publicity. His ethical code of advertising 


contains a provision prohibiting the use of superla- 
tives that may be deemed detrimental to the sale of 
other similar products. A well-known firm had, as 
it happened, been for years describing one of its 
products as “the best.” Its managers were ordered 
to destroy the containers that carried the offensive 
legend. The firm appealed to the Minister of Prop- 
aganda and explained that they had on hand and 
ready for delivery a very large stock of the product 
in question, and that the prohibition of its sale 
would force them out of business with, as a neces- 
sary consequence, increased unemployment. Accord- 
ingly, permission to carry on as before was gra- 
ciously granted, and National Socialist ethics had, at 
least for a time, to bow before expediency. 

The drafting into regular employment of a very 
large number of workers, especially of young people, 
thus removing them from the waiting lines at the 
employment offices, was undoubtedly an achieve- 
ment of great social value and importance. But to a 
certain extent it was purchased at some cost to the 
working population at large. It has often been 
pointed out that the increase in the number of those 
employed was not accompanied by a proportionate 
increase in the nation’s earned income. The work- 
sharing program, and the fact that the very rapid 
absorption of the unemployed meant an increase 
particularly in the lower wage group are in part an 
explanation of iiiis anomaly. But even if we accept 
such an explanation the fact remains that standard 
wages have beaa held at their former level while the 


index of the cost of living (1913-1914=100) has in- 
creased from 117.4 in January 1933 to 124.5 in 
August 1935, in spite of the Government’s efforts to 
keep it stable. The quality of some of the articles 
of general consumption, especially those of the 
cheaper grades, has deteriorated considerably as a 
result of the shortage of raw materials and the 
necessity of using substitutes. This applies to tex- 
tiles, chocolate, soap and many other articles. A 
shortage of certain foodstuffs, which developed in 
the autumn of 1935, has added to the difficulties of 
people with small incomes. In the meantime wages 
are maintained at a veiy modest level. In accord- 
ance with the report for 1934 of the I. G. Farbenin- 
dustrie, one of the leading concerns that employ a 
large percentage of skilled labor, the average weekly 
wage per worker was only 25 marks or, at the gold 
parity of the mark, about $10. From this modest 
income must be deducted payments on account for 
health and unemployment insurance, an income tax, 
and more or less “voluntary” contributions to the 
various social and charitable organizations of the 
National Socialist Party. It was generally expected 
that the Government would have to make some 
vital declaration regarding wages on the occasion of 
the celebrations of May 1, 1935. But this expecta- 
tion was disappointed except in so far as Dr. Ley 
promised that a study of the problem of the “fair 
wage” would be undertaken in the course of the 
year, and that a definite proposal would probably be 
ready by May 1, 1936. 


The leader of the Labor Front, however, looks 
upon wages in a way that is characteristic of Na- 
tional Socialism. “The main issue with the work- 
man is not his ridiculous wage-pennies but the dig- 
nity of his position,” Dr. Ley is reported to have 
declared to the Saar miners at Neukirchen in the 
early autumn of 1935, “and ultimately wage-ques- 
tions settle themselves if the worker is left his self- 
respect. In the last resort the miner cannot be paid 
with money at all. What he receives is only a petty 
remuneration for his unremitting labor. It is there- 
fore aU the more ridiculous for people to begin to 
haggle about such little things.” There is no way 
of knowing what the Saar miners thought about this 
speech, but that such a statement was made by the 
leader of the Labor Front is highly significant. 

If National Socialism has thus far failed to im- 
prove the economic position of the masses of Ger- 
man labor it is largely due to the general economic 
difficulties experienced by the country. It is, how- 
ever, realized by National Socialist leaders that to 
talk of the dignity of labor is not enough, even in a 
country like Germany where dignity and duty have 
an almost irresistible appeal. There is no reason to 
doubt the sincere interest of the Hitler Government 
in the welfare of labor, provided that it is promoted 
in accordance with the principles of the Wdtar^ 
schauung. One of the chief agencies through which 
this interest has manifested itself is the organization 
affiliated with the Labor Front, Hie Kra^t durch 
Freude (“Strength through Jo3r”)* It is the German 


counterpart of the Italian Dopolavoro and it has 
accomplished some very good results in providing 
the working people with opportunities for sports, 
recreations, cultural activities and the like. In the 
course of 1934 the “Strength through Joy” organized 
holiday trips for some 2 million workers. The visit- 
ing of the beauty spots of Germany, to the accom- 
paniment of much publicity and speech-making, is a 
part of the national education of every German to- 
day. As many as 80,000 people were taken on Ger- 
man vessels and at very low rates on trips to Eng- 
land, the Scandinavian countries and Spain. These 
activities would be even more admirable if they 
were not accompanied by a ceaseless “education” in 
the ideas of National Socialism and also, perhaps, if 
they were a trifle less noisy. I remember a rather 
miserable week-end at Nuremberg when I could get 
no sleep at all after about 5 a.m. The enthusiastic 
columns of the exuberant members of the “Strength 
through Joy,” in military formation and at brief 
intervals, kept going by under the windows of my 
hotel, and at the top of their voices all were singing 
martial songs with changeless refrains that extolled 
"Kraft dutch Freude.” I finally got up in despair, 
feeling very weak and morose indeed. 

There is also the highly popular and much adver- 
tised movement for the improvement of the physical 
surroundings of factories, workshops, and other 
places of employment. It is called “Beauty of Work” 
{Schonheit der Arbeit) and makes a strong appeal 
to the German worker, who has always been fond 


of both neatness and floT^ers. In these small im- 
provements he sees evidence of the interest the Gov- 
ernment and the Party are taking in his welfare; 
and perhaps he also sees a promise of greater things 
in the future. Germany’s young people are certainly 
not forgotten, and they are brought up in the idea 
of boundless devotion to the Fiihrer and the country 
under the banners of the Hitler Youth organization 
(Hitler-Jugend). About 6 million boys and girls of 
from 10 to 18 years of age were enrolled in 1934. 
They have their summer colonies and camps, their 
clubs and gymnasiums, their discipline, uniforms, 
badges, banners, bands and parades, a great deal of 
fresh air and healthy exercise, and, of course, a very 
large dose of National Socialist ideology. 

All this might go a long way to maJke one believe 
in Dr. Ley’s theory that wages, after all, are not the 
most important thing. 


Although between Fascism and National Social- 
ism there are some notable differences in the ap- 
proach to the question of industrial relations the 
fundamental factors in the policies they have 
adopted for the elimination of class warfare are 
really identical. Class struggle in the last analysis 
is a manifestation of the freedom of the individual 
to create for himself a place in the sun. It can be 
mitigated to a certain extent by the long and painful 
process of making people realize the interdepend- 


ence and community of their varying interests; but 
it is doubtful whether it can be removed altogether 
without at the same time destroying the freedom of 
the individual. This is exactly what Fascism and 
National Socialism have done. Despite the grandilo- 
quent declarations of the leaders and their eulogies 
of the “corporate spirit” and “national solidarity,” 
in both Italy and Germany the entire machinery for 
the maintenance of peace between capital and labor 
rests wholly on the supremacy of Government and 
Party. And in both countries they have carefully 
weeded out every vestige of potential opposition. 
Labor disputes are the wretched and sinister prod- 
ucts of capitalist society, and it is usually labor that 
suffers most. But the price at which industrial peace 
has been purchased in Italy and Germany seems 
altogether too high. And no amount of social work, 
however commendable in itself, not even the success 
of Germany in reducing unemployment, can dis- 
guise the fundamental fact that employers and labor 
in the two countries are today at the complete mercy 
of either the Fascist or the National Socialist Party. 




“It is to the land that the hopes and energies of 
the peoples must turn, to draw from this primary 
source of all prosperity, from this ever renewed 
reservoir, the regenerating powers which will restore 
to the world its serenity and its wealth.” In these 
words Mussolini expressed the fundamental beliefs 
that determine Fascist policy in regard to the farmer. 
Fascism sees in the rural community the chief main- 
stay of the State, and the assurance of the contin- 
uous and harmonious development of the Nation. 
The peasants are pictured as a robust and healthy 
population, the depository of that national, secular 
wisdom and moral force that originates in tradition 
and is handed down from generation to generation. 
By maintaining a high birth rate they provide the 
country with the bulk of its man power; they treas- 
ure the ancient virtues of thrift, love of the land, 
and devotion to church, home and family. It is the 
mighty stream of fresh blood coming from the coun- 
tryside that rejuvenates our industrial civilization 
and saves it from complete decay. Agricultural work 
is a great deal more ^an merely a way of earning 
a living. It is also a social duty and, as a Fascist 



writer has put it, “a school of sacriSce and moral- 
ity,” for the peasant struggles unceasingly against 
the unpredictable manifestations of the uncontrol- 
lable forces of nature. Labor in the field is a mission. 
It received deserved honors'in ancient times, when 
the land and its fertility were the objects of reli- 
gious cults, and had their temples, their priests and 
their sacred rites. 

Fascism believes, therefore, that it is the duty of 
the State to devote all its resources and all its en- 
ergies to promoting the well-being of the tillers of 
the soil. At the same time Fascism holds that it is 
also the duty of the State to make certain that the 
country is in a position to provide enough of the 
essential foodstuffs to meet its domestic needs. This 
feeling is inspired not only by considerations of na- 
tional safety in case of a military emergency, but 
also by the compulsion of national honor and self- 
respect. Thus the two principles on which Fascist 
agricultural policy is based become apparent: the 
recognition of the vital importance of the man on 
the land to the progress and development of the 
community, and the desire to make his harvests ade- 
quate to supply his country’s demands. 

National Socialism is, if possible, an even more 
enthusiastic worshiper of the mystic virtues of the 
rural community than is Fascism. It has already 
been said that many of the difficulties met with by 
post-war Germany are ascribed by National Social- 
ist writers to the excessive industrialization of the 
country since 1870. This, they claim, resulted in the 


breakdown of the equilibrium between agriculture 
and industry; it led to the rapid growth of an urban 
proletariat crowded in the tenements of the great 
cities where they fell an easy prey to the hated 
“Marxists”; it increased Germany’s dependence on 
foreign markets, jeopardized the military prepared- 
ness of the Nation and sapped its fighting power 
when war had been declared. More than that, the 
neglect of agriculture, needless to say, undermined 
the very source of the race, and diluted that vigorous 
blood the safeguarding of which is one of National 
Socialism’s most sacred aims. “The possibility of 
preserving a sound peasantry as the foundation of 
the whole Nation,” writes Hitler in Mein Kampj, 
“cannot be estimated too highly. Many of our pres- 
ent evils are the result of the unhealthy relationship 
between the rural and urban population. A solid 
bloc of peasants on their own small or medium- 
sized farms has been throughout the ages the best 
guarantee against social afflictions of the kind we are 
sufi^ering from today. The existence of such a group 
is also the one thing that can make it possible for 
a Nation to earn its daily bread within the limits 
of its own economic organization.” No wonder, there- 
fore, that in Germany, during the first three years 
of the Hitler regime, government action went fur- 
ther in the aid of agriculture than it did in any other 
branch of economic life. 

Glorification of the tiller of the soil, like any other 
principle of Fascism and National Socialism, cannot 
be accepted without marked reservations, if it can 


be accepted at all. Is it true that close and daily 
contact with the soil necessarily breeds those sturdy 
and magnificent virtues which are so eloquently ex- 
tolled by Mussolini, Wallher Dane and so many 
others? Like most city dwellers whose experience 
of the country is limited to a few hurried week-ends 
and a few quite as hunied summer weeks by the sea 
or in the mountains, I often have an almost inesist- 
ible longing for the wide open spaces; especially on 
some mellow spring or autumn evening when, 
emerging from the eternal gloom of the subway, one 
suddenly catches through the canyons of the towers 
of Manhattan a glimpse of a magnificent sunset, 
seemingly so out of place in its big city setting. I 
feel, therefore, rather inclined to idealize country 
life and like to imagine that a day will come when 
I, too, will be able to settle down on a patch of land 
and live happily among dogs, eggplants, cabbages 
and potatoes. Literature is full of glowing descrip- 
tions of rural life which fit beautifully into the pic- 
ture traced by the Fascist and National Socialist 
leaders. Turgenev’s Sportsman’s Sketches and 
Hemon’s unforgettable Maria Chapdelaine are 
only two examples taken at random from hundreds. 
But do they give a true picture or the whole picture? 
For we have also The Village by Ivan Bunin, a 
recent Nobel Prize winner, and we also have 
Tobacco Road. Both in peace and in war I have 
had opportunities to make close-quarter observa- 
tions of peasant life in various parts of Russia, and 
in Poland, Rumania, Galicia, France, England, Ger- 


many and Italy. There are, no doubt, many coun- 
try districts that would seem to bear out Fascist and 
National Socialist contentions. But there are also 
many others, especially in Eastern E.urope, in cer- 
tain parts of Germany, and in the mountain regions 
of France and Italy where one finds none of the 
admirable physical, moral and social qualities which 
are taken for granted by Walther Darre. Indeed it 
is impossible to imagine a life bleaker, more brutal 
and more lacking in all redeeming features than the 
one which in many places is lived by the peasantry. 
I understand that this is also true of the conditions 
that prevail in the cotton-growing sections of some 
of the Southern States. Contact with the soil has 
not, then, magical effects in every case, and the 
question inevitably arises whether the second part 
of the National Socialist formula, “Blood and Land” 
{Blut und Bodm) is not as empty of real meaning 
as the first. 

It may be just as well that no such doubts are 
permitted to interfere with the farm policies of Fas- 
cism and National Socialism, although measures for 
the relief of farming do not necessarily depend on 
any idealization of the rural community. 


Mussolini’s great effort for the rehabilitation of 
agriculture took the form of a comprehensive plan 
known as “integral land reclamation” (Jbonifica in'- 
tegrde). In order to realize the significance of the 


measures taken it must be remembered that while 
Italy has more than her share of beauty and sun- 
shine, her soil is extremely unfitted for agriculture. 
Mountain ranges occupy a considerable part of the 
peninsula, and there are many large barren and 
marshy areas which are unsuitable for cultivation 
and are also poisonous with malaria. This was one 
reason why some 9.5 million Italians have been’ 
practically forced to emigrate and endeavor to make 
a living in the United States, in South America and 
in other parts of the world. To stop this stream of 
emigration is one of the purposes of the Fascist 
regime. The first measures for land reclamation go 
back to 1882 and were concerned chiefiy with the 
draining of marshes and the carrying out of various 
hydraulic projects. In the years following, this policy 
of technical land improvement was accompanied by 
measures for home colonization and the conversion 
of the reclaimed land into small holdings. It was 
not, however, until the advent to power of the Fas- 
cist Government that land reclamation became a 
general and comprehensive policy. It has been car- 
ried into effect by a series of laws and decrees of 
which the Decree of December 30, 1923, the Law of 
May 18, 1924, the so-called “Mussolini Law” of De- 
cember 24, 1928, and the Decree of February 13, 
1933, are the most important. 

The “integral” character of Fascist land reclama^ 
tion is made evident by its program which provides 
for the draining of marshes, the elimination of 
malaria, such enrichment of the soil as will it 


suitable for agriculture and the colonization of the 
land so reclaimed. This last step in the program in- 
volves the building of farmhouses and roads and the 
arranging for water supplies. The plan is dealt with 
as an entity. It has for its purpose the establish- 
ment of new agricultural centers, the providing of 
means of existence for the largest possible number of 
farmers, and the bringing about of a more even dis- 
tribution of the population, which, in its turn, will 
relieve the most congested areas. The projects com- 
prised in integral land reclamation are divided into 
two groups: those recognized as primarily of value 
to the country at large and those primarily of bene- 
fit to local landowners. The character of the work 
undertaken may be similar in both cases; the differ- 
ence in classification is based essentially on tiae 
varying degree of public usefulness involved, as also 
upon the fact that the projects of the first group 
must be carried out jointly, as a part of the general 
plan, while those of the second can be executed 
separately. It may likewise be true that the projects 
in the public interest involve a radical change in the 
existing methods of production while those of imme- 
diate benefit to local landowners merely provide for 
the betterment of farming methods already in use. 
But it may be questioned whether the latter dis- 
tinction is always evident. In any case this division 
into two categories is of great practical importance. 
For the projects recognized as being primarily public 
are carried out at the expense of the State, with 
some assistance from local owners, while projects 


that are primarily of benefit only to the locality in 
question are carried out largely at its expense. The 
^are of the State in financing land reclamation 
ranges from 75 to 92 per cent of the total cost of 
projects in the first group and is normally about 33 
per cent in the case of the second. This latter per- 
centage, however, is subject to important variations. 

Participation in the execution of the projects de- 
cided upon is compulsory for all landowners in the 
area affected. And, since the local owners will be 
the first to benefit by the improvements, they are 
requested to contribute to the execution of the work. 
Indeed it is on the presumptive benefit to be de- 
rived by them from the work undertaken that the 
amount of their contributions is assessed. The exe- 
cution of the work is usually entrusted to a local 
consortium or association which is made up of 
representatives of the local landowners and is at the 
same time an organ of the State. The State there- 
fore reserves, and has widely used, the right to inter- 
vene in the affairs of the associations. Although the 
officers of the associations are supposed to be elected, 
their presidents must be confirmed by the Govern- 
ment. If, moreover, local landowners fail to organ- 
ize an association for land reclamation such an 
agency is created by the Government irrespective of 
the wishes of the landowners. 

The actual program for land rehabilitation in any 
particular district is usually determined by the local 
association for land reclamation; but not infre- 
quently the initiative, and sometimes direct orders. 


come from the Government. All projects must be 
approved by the Minister of Agriculture and For- 
estry. The execution of the work is carried out 
either directly by the Government or, as is more 
usual, through the associations. They are made 
responsible for the financing of the projects in so 
far as they have been paid for by the contributions 
of the local landowners; and in the majority of cases 
the associations carry out that part of the work at 
the expense of the landowners. An owner who is 
unable or unwilling to meet charges assessed on him 
by the associations may either voluntarily transfer 
his property to someone willing to pay such charges, 
or his property is expropriated and he is indemnified 
according to its income value. This Fascist policy in 
the matter of land reclamation offers a good exam- 
ple of the attitude of the movement toward private 
property in general. The right of private property 
is maintained, but the owner is under obligation to 
use his land in a manner that the State considers 
desirable. If he fails to do so, his right in the prop- 
erty is destroyed, and it is transferred to someone 
who is willing to undertake what the Government 
considers to be the social obligations attached to 

The State, however, denies all intention of under- 
mining private ownership. Government interven- 
tion, it is argued, consists not in any attempt to re- 
move private owners or to bring about the rigid 
regimentation of farming, but in directing the activ- 
ities of the farmer into channels that are believed 


to be socially desirable. The State feels the more 
justified in doing so since it has invested large sums 
of public money in land improvements. 

The program of integral land reclamation con- 
cerns itself not only with economic and social meas- 
ures but also with questions of health and the dis- 
tribution of population. In districts, for instance, 
that are afflicted with malaria a definite rotation of 
crops with the elimination of all pasture land may 
be enforced. Special types of farm buildings, de- 
signed to minimize the danger of malaria, may be 
made compulsory. It is a part of the policy to pro- 
vide employment in agriculture for the largest num- 
ber of people. Any methods of cultivation, there- 
fore, which tend to reduce the volume of labor em- 
ployed per hectare may be excluded. The average 
yield must also be maintained above a specified 
level. It is the aim of the Government to provide 
the farming people with stable and purely rural 
employment throughout the year. It is considered 
desirable, therefore, to establish newly created and 
independent farmers on plots of adequate size or, on 
large estates, to introduce a system of crop-sharing 
based on long-term contracts which will eliminate 
the employment of day-laborers. There is no hard 
and fast rule as to the exact relationship between 
the land and its tiller, but the intention of the legis- 
lation enacted is to make the connection permanent 
not only when the peasant has become an inde- 
pendent farmer or a tenant, but also when he works 
on a large estate. An agricultural laborer therefore 


is visualized as a permanent employee living in a 
cottage with his family, having a direct interest in 
the produce of the land he is cultivating, and linked 
to it not merely because it provides him with a liv- 
ing, but also by ties of natural affection. He is no 
longer merely selling his labor by the hour or by the 
day, but he is considered, as Signor Costanzo puts it, 
“as a human being, a partner in the common enter- 
prise.” The policy of the Government in this respect 
has been largely successful. In regions affected by 
integral land reclamation the percentage of day- 
laborers has vastly decreased, and in a number of 
places it has disappeared altogether. The land reha- 
bilitation program has also contributed to the reduc- 
tion of unemployment, for the number of men em- 
ployed on the various projects varied from an aver- 
age of 33,000 in 1929-1930 to 71,000 in 1933-1934. 

The centralizing tendency likewise makes itself 
felt in the organization of the work of land rehabili- 
tation. Since 1928 the local associations for land 
reclamation have been compulsorily united into a 
National Association. This is a Government con- 
trolled institution with broad powers in all matters 
relating to land policy, especially in financing, which 
is largely on a credit basis and is met by the issue of 
special bonds guaranteed either by the State or by a 
lien on the property of the individual landowner. A 
transformation of the National Association into the 
Fascist Institute for Land Reclamation was an- 
nounced at the end of 1934, and was officially inter- 
preted as a further step toward the strengthening of 


the control of the Corporate State over the work of 
the local associations. 

The Government has also been very active in 
improving land in mountain areas. This involved 
projects providing for afforestation, prevention of 
erosion, irrigation, and the like. The program of 
land improvement in all its ramifications represents 
what is for a poor country like Italy a very consider- 
able financial effort. The entire expenditure for such 
purposes from 1922-1923 to July 1, 1934, has been 
oflBcially estimated at 6,144 million lire, while only 
1,782 million were spent on similar work from 1870 
to 1922. The total area in which integral land 
reclamation had been carried through by July 1, 
1934, was put at 4.7 million hectares,’ and plans had 
then been prepared for the reclaiming of 3.4 million 
more. The bulk of the work has been done in the 
course of the last five years. 

The most celebrated conquest by the bonifica in- 
tegrale, and one much advertised, is the reclamation 
of the Pontine Marshes. The dismal appearance of 
this God-forsaken region is familiar to thousands of 
tourists, for it is crossed by the Appian Way, and 
few visitors to Italy miss it. The transformation 
that the Fascist regime has worked in converting the 
swamps and barren wastes of the Agro Pontino into 
honest farm land is truly miraculous, especially if 
one remembers that the work of reclamation was 
embarked upon only at the end of 1931. When, in 
August 1935, I visited the new agricultural settle- 

* One hectare = 2.47 acres. 


ments in this region, more than 41,000 hectares had 
been redeemed, and the remaining 2,000 hactares of 
marshes were about to disappear. The town of Lit- 
toria was founded in June 1932 and that of Sabaudia 
in August 1933. By the summer of 1935 they had 
become urban settlements with churches, hospitals, 
schools, government offices, all modernistic and a bit 
pretentious. While these two new towns naturally 
lacked the charm of the old Italian cities, they were, 
frankly, a great credit to the regime. Sabaudia, 
moreover, is pleasantly situated on the shores of 
Lake Paola, within easy reach of the Mediterranean. 
With its flat-roofed white houses and growth of 
palm trees it presented, under the burning sunshine 
of August, a distinctly tropical appearance. In 1935 
about 60,000 people were living where once were 
the marshes. Land is divided into small holdings of 
from 10 to 30 hectares. The task of providing set- 
tlers is entrusted to the Opera Nazionale Com- 
battenti (National Association of War Veterans) 
which, in spite of its name, is a purely Government 
agency. Most of the settlers come from the Province 
of Veneto which is particularly congested and the 
population of which is believed to be better fitted to 
withstand the danger of malaria. The new settlers 
usually have no capital and are provided by the 
Opera Nazionale, with a house, implements, stock, 
seed and so on. The only thing they bring with them 
is the old family furniture. Under their agreement 
with the Opera Nazionale, an agreement that covers 
the next 25 or 30 years, they turn over to it their 


entire harvest save what is needed for themselves 
and their farms. The Opera Nazionale keeps an ac- 
count with each settler and credits him with pay- 
ments for the amortization of his debt by converting 
into lire, and at current market prices, the agricul- 
tural produce he has grown and delivered. An aver- 
age family consists of twelve or fourteen. One 
family, the Director of the Opera Nazionale told me, 
came with 24 sons. It was given the maximum allotr 
ment of 30 hectares, and certainly deserved it. The 
settlers live in separate four-room farmhouses which 
have stables attached. I was struck by the absence 
of such farm buildings as barns and was told that 
this was due to a shortage of funds. The several 
farms I visited would not impress anyone used to 
American standards, but they were undoubtedly a 
great improvement upon those the settlers had left 
behind them. No provision has thus far been made 
to prevent the breaking up of the holdings in the 
future. “We had no time to think about it,” the 
Director remarked. Land varies in quality, and some 
of it is not very good; but much is being done to 
enrich it. The use of tractors is permitted for only 
the first year or two. After that — ^in order to provide 
employment for the largest possible number — culti- 
vation is to be carried on by human labor with, of 
course, the help of the farm stock. The settlers cer- 
tainly did not look prosperous, but they looked 
healthy, gay, as Italians so often are, and seemed to 
be willing to work hard. They know that if they do 
not live up to what is expected of them they will 


have to return to their former homes. A few such 
expulsions had actually taken place. 

All things considered, the visit to the Agro Pontino 
left an extremely favorable impression. It cannot 
reasonably be doubted that in this field the Fascist 
regime is doing truly excellent work. The burden it 
imposes upon, the Treasury, which, to repeat, is a 
heavy one for a poor country such as Italy, must 
also be borne in mind. 

THE “battle of THE WHEAT” 

The struggle to attain self-sufficiency in food- 
stuffs, especially in wheat, is the second pillar of the 
agricultural policy of the Fascist r%ime. The 
“Battle of the Wheat” was dramatically heralded 
by Mussolini at the night session of the Chamber 
of Deputies on June 25, 1925, a session to which 
Fascist writers like to refer as “historic.” The Duce, 
of course, immediately assumed command and, with 
himself as chairman, he created a committee which 
he likes to call his General Staff. In 1910-1914 Italy 
had under wheat an average area of 4.7 million 
hectares which produced 48.7 million quintals,* or 
10.4 quintals per hectare. Some 14.9 million quintals 
had to be imported. To grow this wheat at home 
became one of the aims of the regime. By the end 
of the three years, 1923-1925, immediately preceding 
the proclamation of the “Battle of the Wheat,” the 
yield per hectare had already increased to 12.4 quin- 

* One quintal = 220 pounds = 3.7 bushels. 


tals, but imports still averaged 23.8 million quintals. 
As a result of the energetic measures taken by the 
Government the improvement now became a rapid 
one; and by 1933 the Government could proclaim 
the “Victory of Wheat,” for in that year something 
more than 5 million hectares had produced an aver- 
age of 15.9 quintals per hectare, a record crop, or 81 
million quintals in all. Italy needed no more foreign 
grain and the occasion was celebrated with much 
solemnity. In 1934, however, unfavorable weather 
conditions resulted in a poor harvest, and although 
the area under cultivation — 4.9 million hectares — 
was only slightly below that of the previous year, 
the total yield dropped to 63.4 million and the yield 
per hectare to 12.8; that is, very nearly as low as 
the level of 1923-1925. It would seem however that 
this was merely an accidental setback. The pro- 
visional estimate for the harvest of 1935, which ap- 
peared in II Messagero on August 8, 1935, puts 
the total crop at 76.4 million quintals, and the aver- 
age yield per hectare at 15.2. It is believed that the 
domestic supply of grain will be sufficient in 1935 to 
meet the requirements of the country. 

Assuming that the average crop yields for 1931- 
1933 will be maintained in the future, it would seem 
that the “Battle” has actually been won. But like 
all victories, it was purchased at a price. Some of 
the measures used to increase the yield and to ex- 
pand the area under wheat have been perfectly jus- 
tifiable and even commendable. Such, for instance, 
was the campaign to educate the farmer in the use 


of better seeds, implements and fertilizers. Here 
intensive propaganda was conducted by special or- 
ganizations and by the associations of agricultural 
employers and workers under the leadership of their 
respective national confederations. Much publicity 
is now given to the annual “wheat contests” which 
are held in every province and also on a national 
scale, the latter in the presence of the Duce. A vast 
amount of propaganda literature, as well as exhibi- 
tions, experimental stations, travelling lecture-ships, 
training schools and the like serve the same purpose. 
Credit institutions come generously to the assistance 
of farmers who have embarked on a policy of im- 
provements or who desire to purchase agricultural 
machinery. Foreign oil intended for the use of trac- 
tors and other machines was exempted from both 
import duties and the sales tax. 

More effective, probably, but also much less unob- 
jectionable, were the measures adopted by the Gov- 
ernment to maintain the level of agricultural prices. 
Not only was an exceptionally high tariff imposed 
on imported wheat (since 1931 it has been 75 lire 
per quintal), but it was also provided that foreign 
wheat should not constitute more than a certain per- 
centage of the total wheat milled. In June 1933 the 
proportion of domestic wheat was put at 99 per cent. 
It varied from time to time, but always remained 
very high. Similar restrictions were imposed on im- 
ported flour. Much has also been done to encourage 
the peasants to sell their wheat through specially 
built collective warehouses, where in 1934 they re- 


ceived on delivery an advance of 75 lire per quintal 
and 90 lire in 1935. The farmers were thus encour- 
aged to withhold their stocks from the market in 
order to raise prices. The millers were at the same 
time put under obligation to purchase a given per- 
centage of their supplies from the collective stores. 
And the Government assumed responsibility for 
part of the interest due on the sums advanced to the 
farmer as wheat loans. The effect of these measures 
was that while Italian wheat prices declined during 
the depression, they continued to be considerably 
above world prices. This was undoubtedly a hard- 
ship to the consumers in days of rapidly dwindling 
incomes, especially in Italy where, with the low level 
of wages, expenditure on staple foods means a very 
large item in the worker’s budget. 

Measures taken by the Fascist Government for 
the encouragement of crops other than wheat failed 
to effect any striking changes. Steps were taken to 
relieve the burden of farm indebtedness which, with 
the continuance of the depression, had become un- 
bearable. It may be said that in general the desire 
of the regime to help the rural community was cer- 
tainly in evidence, and full credit must be given to 
Mussolini for his land reclamation program. But 
the fact remains that the fate of the Italian tiller of 
the soil is far from being a fortunate one. The earn- 
ings of agricultural labor, as we have seen, are ap- 
pallingly low. On October 25, 1934, the national con- 
federations of employers and workers reached an 


agreement designed to eliminate the emplosnnent of 
day-laborers, who were to be put on a profit-diaring 
basis. Whether this change will lead to an improve- 
ment in the laborer’s position is still uncertain. In 
the meantime the poverty of Italian peasants can- 
not but strike any observer who tries, when in Italy, 
to get away from the beaten roads. In the summer 
of 1935 I took several walking trips in the Central 
Apennines. The peasants, in their picturesque vil- 
lages high up in the mountain and accessible only by 
narrow paths, live on the meager proceeds of tiny 
fields located not infrequently several hundred feet 
below the village itself. Their farms consist largely 
of rocks and little grows on them. The contadino 
and his mule appear to be inseparable, and both 
alike seem to be resigned to their endless and largely 
futile labor. Six or seven lire a day is all a peasant 
can hope to earn if and when he can get work. They 
eat meat once or twice a year. "/ contadini sono tutti 
poveretti" (“Peasants are all poor”) one of them 
told me with resignation, and the truth of the state- 
ment was only too obvious. It would be unreason- 
able to blame Mussolini for this state of affairs, 
which he inherited from the past. But it is this 
situation, I believe, that is at the bottom of Italy’s 
East African venture. Italy’s tariff policy, of course, 
is in a different class, although here, too, Mussolini 
merely followed in the footsteps of his predecessors. 
And since the League of Nations has applied eco- 
nomic sanctions to Italy the fostering of domestic 


production of foodstuffs is regarded by many Ital 
ians as the most striking manifestation of Musso- 
lini’s foresight and political genius. 


Although National Socialism has been at the helm 
for a much shorter time than has Fascism the meas- 
ures taken by the Hitler Government in the sphere 
of agriculture have been a great deal more drastic 
and far-reaching than those of Mussolini. This is 
probably due in part to the fact that the Germans 
take their slogan “Blood and Land” much more 
seriously than the Italians take theirs. It is due also 
in part to their more intense desire to escape from 
dependence on foreign countries for their food sup- 
plies, a desire that finds a strong economic stimulus 
in the foreign trade and exchange diflBculties which, 
since 1933, have become more and more pronounced. 

The most spectacular innovation of the National 
Socialist agrarian legislation is the Law on Heredi- 
tary Farms {Reichserbhofgesetz) of September 29, 
1933.* It established the peasant farm (Hof) as a 
hereditary farm (Erbhof) which cannot be sold, 
mortgaged or disposed of by inheritance except in 
the manner provided by the Law. In order to qualify 
as a hereditary farm, a farm must meet certain con- 
ditions. It must be a self-contained economic entity 

* The provisions of the Law were amplified and expounded in 
the circulars (.Durchfiihrungsverordnungen) of October 10, 1933. 
December 19, 1933, April 27, 1934, and January 4, 1935. 



worked largely by the labor of the farmer’s family. 
In practice, however, all farms from 7.5 hectares to 
125 hectares are classified as hereditary and larger 
farms may be included under certain conditions. The 
hereditary farm comprises not only land and farm 
buildings, but also agricultural machinery, imple- 
ments, livestock and the various supplies and reserve 
capital necessary for the successful carrying on of 
the agricultural enterprise. The owner of the heredi- 
tary farm has the title of Bauer (Peasant) which no 
one else is permitted to use, all other landowners 
being described by the term Landmrt. To be a peas- 
ant is now declared to be a most honorable position. 
It can be conferred only on persons who can trace 
their German ancestry back to 1800, a task which is 
easier than would be expected because of the com- 
plete and excellent church records. A peasant must 
also possess the qualities requisite to the proper 
working of his farm (Bauemfahigkeit). The loss of 
these precious qualities may result, under certain 
conditions, in his removal from his hereditary farm 
by an order of the hereditary court (Anerbenge- 
richt). The right of succession to a hereditary farm 
is carefully established by the law and is based on 
the idea of retaining the property in the male line. 
The order of succession is as follows: the sons of the 
peasant; his father; his brothers; his daughters; his 
sisters; any other descendants in the male line in 
order of priority. The sons of the prospective heirs 
take, in the order of succession, the place of their de- 


ceased parent. The hereditary farm cannot be di- 
vided (a rule with just one exception) and it passes 
to a single heir. Which of the sons is to get the farm 
is decided by local customs, which favor either the 
eldest or the youngest. In the absence of any defi- 
nitely established custom the youngest son receives 
the farm on the ground that this reduces the prob- 
ability of a frequent change in ownership. In cer- 
tain cases, which have their source in customary law, 
or on showing good cause, the peasant may enjoy a 
certain degree of testamentary freedom, but only 
with the approval of the hereditary court. The 
widow and the other dependents of the deceased 
peasant have a right to maintenance from the farm; 
minors are entitled to proper education and train- 
ing; and all alike have the right to return to the 
farm in case of illness, disability or old age {Heimat- 
zufiucht). For the loss of their share in the farm 
they are also entitled to compensation from the 
residue of the estate of the deceased, if there be such 
residue. The Law on Hereditary Farms introduces 
into peasant husbandry the principle of the Prussian 
Fideikommisse which, until 1919, regulated the suc- 
cession of estates held by the nobility. The new 
legislation has three main purposes: to strengthen 
the link between the peasant and his farm; to elim- 
inate the possibility of the breaking up of peasant 
holdings into small strips; and to relieve the peasant 
from the burden of mortgages and the danger of 

So far as the first two of these objects were con- 


cerned the National Socialist Government had no 
special grounds for anxiety. The tradition of pre- 
serving the farm intact at the death of the head of 
the family is firmly rooted in German peasantry and 
has withstood the test of centuries. Their attach- 
ment to the native soil has been fully proved and 
hardly needs any special encouragement. According 
to Professor Bering, in the post-war period four- 
fifths of the German peasant farms were self-con- 
tained, compact holdings, jealously guarded against 
partition. The very small peasant holdings are to be 
found only in southwestern Germany, especially 
along the Rhine and in the country spreading north- 
ward into Thuringia. This difference in the forms 
of tenure goes back to the early Middle Ages. The 
smallness of the holdings in the south is due not to 
the evil effect of Roman Law and of the Code Napo- 
leon introduced early in the nineteenth century, as 
is so often contended by National Socialist writers, 
but to the simple economic fact that the Rhineland 
is a vine-growing country where the intensive culti- 
vation of small holdings is perfectly sound economi- 
cally. It must also be said that the new National 
Socialist legislation, which claims to revert to the 
traditional forms of inheritance as practised in Ger- 
many from time immemorial, really infringes upon 
one of the fundamental rules of German customary 
law: the equal right of all children in their father’s 
estate. Although this right is not specifically denied, 
under the prevailing conditions of farming the 
chance that the children who do not get the farm 


will obtain any substantial part of the estate is very 
small indeed. The new law also changes fundamen- 
tally the position of the widow, who is not even 
mentioned among the heirs, although she is legally 
entitled to maintenance. 

As to relief from the burden of mortgages and the 
fear of foreclosure it must be pointed out that the 
financial difficulties that have been experienced of 
late by German farmers have been due only in a 
minor degree to indebtedness resulting from death 
settlements. According to Professor Bering, little 
more than one-quarter of the debt, amounting to 
some 13,000 or 14,000 million marks, incurred by 
German farmers since the end of infiation to 1932 
originated in death settlements. This, of course, is 
not a negligible amount. But the complete with- 
drawal from the market of hereditary farms raises 
a number of complex questions. In accordance with 
the computations of the German Institute for Busi- 
ness Re.'search the law affects about one million 
farms or 54 per cent of the arable land. They can- 
not be sold or mortgaged, although the owners are 
made liable for the mortgages incurred in the past, 
which are being converted, at a considerable dis- 
count, into annuities. The question of agricultural 
credit immediately arises. Mortgage credit is ob- 
viously ruled out. It is to be replaced by a form of 
personal credit based on the productivity of the 
farm and also on the possibility that the farmer who 
fails to meet his obligations may forfeit his right to 
enjoyment on the ground that he has not shown the 



required diligence in administering the property. 
The question of new farm credit is still much dis- 
cussed and awaits solution. 

It may be said in general that the Law on Heredi- 
tary Farms did not bring any substantial changes in 
the order of peasant succession that prevailed over 
the largest part of Germany, with the exception of 
the southwest. The indivisibility of the farm was a 
rule that was generally enforced and that had be- 
hind it all the authority of tradition and customary 
law. It is too early to speak of the practical effect 
of the new legislation. Unquestionably, it came as a 
severe blow to the members of the well-to-do peas- 
ant families who suddenly found themselves faced 
with the unpleasant fact that they would get noth- 
ing from their fathers’ estates. It seems likely that 
it will lead to efforts by the heads of families to 
invest less in their farms and build up capital funds 
from which their less fortunate heirs may be indem- 


Of much greater immediate consequence than the 
Law on Hereditary Farms was the complete reor- 
ganization of agriculture which followed the pub- 
lication on September 13, 1933, of the Law on the 
“Agricultural Estate” iReichsndhrstandgesetz). It 
will be remembered that after the formation of the 
Hitler Government there was much talk about the 
building up of a German Corporate State, but that 


SO far the plan had failed to materialize, with, how- 
ever, one important exception. This exception was 
the “Agricultural Estate,” a creation — ^like the Law 
on Hereditary Farms — of Walther Darre, who in the 
summer of 1933 succeeded Dr. Hugenberg as Min- 
ister of Food and Agriculture. “Agricultural Estate” 
is really a very inadequate translation of the Ger- 
man Reichsnahrstand. Like the Italian corporations, 
the Reichsnahrstand is a complex structure of asso- 
ciations, bureaus and boards based on the idea of a 
“cycle of production,” in this case the production 
of foodstuffs. The Agricultural Estate, therefore, 
comprises all activities dealing with the production, 
processing and distribution of foodstuffs. It might 
have been better, perhaps, to call it “Food Estate” 
if the phrase did not sound so awkward in English. 
The Law of September 13, 1933, was merely the 
comer stone of the new organization which since 
that time has been expanded in innumerable laws, 
decrees and circulars. 

The Reichsnahrstand is a good example of the 
new type of organization that has come into exist- 
ence in the Third Reich and that one finds very 
difficult to classify. It is, strictly speaking, neither 
a private corporation or association, nor an organ 
of the State, but combines the features of both. The 
Reichsndhrstand has absorbed all the numerous as- 
sociations and organizations connected with the pro- 
duction and distribution of foodstuffs that existed in 
Germany in the past. Membership in the Reichs- 
ndhrstand is also compulsory for every individual 


who is engaged in any pursuit or trade concerned 
with foodstuffs. The Eeichsnahrstand is headed by 
the Reich Peasant Leader (Reichsbauemfuhrer) ap- 
pointed by the Qiancellor. To add to the confusion, 
the present Reich Peasant Leader is Walther Darre, 
who is also Minister of Food and Agriculture. The 
Reichsndhrstand is organized on the leadership prin- 
ciple; that is. Darre appoints the chief oflScers of the 
organization who, again, appoint their subordinates, 
and this is continued all down the line. The former 
autonomy of the agricultural associations, which 
would naturally be out of place in the totalitarian 
State, is completely gone. The fundamental prin- 
ciple of the new structure would seem to be that of 
voluntary cooperation between the Government and 
the trades and producers concerned. The Govern- 
ment, through the Minister of Agriculture, lays 
down the general lines of the policy which it is the 
duty of the Reichsndhrstand to put into practice. 
To what extent the cooperation between the Reichs- 
ndhrstand and the Government is voluntary is 
doubtful, and one may well wonder whether Darre 
himself can be certain when he is Minister of Agri- 
culture and when he is Reich Peasant Leader. On 
the other hand, it is probably true that the local 
organs of the Reichsndhrstand are largely repre- 
sentative of the interests of the producers and 
traders; but these interests, of course, are never per- 
mitted to interfere with what is believed to be the 
broader interests of the Nation. And this is a ques- 
tion which the Government, the National Socialist 


Party and Darre himself have to decide. It was 
announced on October 6, 1935, that the Reichsmhr- 
stand, following the example of the Reich Chamber 
of Economics, had, as a body joined the Labor 
Front. It is uncertain at the time of writing whether 
this will not involve some limitation of the freedom 
of action the leader of the Reichsndhrstand has 
enjoyed in the past. 

The Reichsndhrstand is an organization that is 
most extraordinarily involved. It consists of two 
separate sets of organizations. In one the divisions 
are territorial or horizontal; in the other they are 
vertical or according to trade. The whole territory 
of the Reich, for the purposes of the Reichsmhr- 
stand, is divided into 19 Landesbauernschaften, 
which are again subdivided into 514 Kreishcuemr 
schajten and many thousands of Ortshauemschaften. 
The vertical organization consists of associations 
and boards which concern themselves with separate 
branches of husbandry such as grain, dairy farming, 
livestock, poultry, milk, cooperative societies, and so 
on. There is, of course, a great deal of overlapping 
and a certain amount of confusion. It is freely ad- 
mitted in Berlin even by the admirers of Darre that 
the organization has been built up too rapidly and 
needs a good deal of readjustment. 

I had an interview with the Peasant Leader 
{Bauemjuhrer) of Landesbauernschaft Kurmark, 
Bredow. He proved to be a real peasant, and very 
different from the university graduates on his staff. 
Herr Bredow received me in a brown shirt, breeches 


and suspenders, and in his black tie he wore a large 
pin which carried the National Socialist emblem. He 
delivered, for my benefit, a political speech on the 
regeneration of Germany and the greatness of Hitler. 
I left him with the distinct impression that he was 
merely a figurehead, an impression that was con- 
firmed by information from various sources. 

In spite of its obvious imperfections the Reichs- 
mhrstand has proved to be an effective instrument 
for the control of German agriculture. The ultimate 
aim of this control is to create in Germany a bal- 
anced economy where the supply and demand of 
foodstuffs will be in a state of equilibrium. The 
practical measures have originated in the necessities 
of the moment,- namely the need of maintaining the 
stability of agricultural prices, and also of develop- 
ing those branches of agricultural production which 
might provide substitutes for commodities formerly 
imported from abroad. The already prohibitive 
tariff on imported foodstuffs has been further in- 
creased and new duties have been imposed on fats, 
eggs and bacon. Imports of butter had, in 1932, al- 
ready been made subject to a quota. A series of de- 
crees in 1933 and 1934 introduced a system of close 
supervision over the production and distribution of 
grains, fats, milk and dairy produce, livestock and 
meats, fruit and vegetables, potatoes and sugar. This 
system of supervision went much farther than any- 
thing that had been attempted in industry. Prices 
of the various foodstuffs were fixed by the Govern- 
ment. The millers received definite orders as to how 


much and what kind of grain they would be per- 
mitted to mill. The grades and prices of flour were 
also subjected to minute regulations. Every mill 
was, moreover, put under obligation to keep on hand 
a stock of grain representing not less than 150 per 
cent of its average monthly requirements for the 
preceding year. Farmers were to deliver at specified 
dates specified amounts of grain. By an ordinance 
of July 14, 1934, special associations for the produc- 
tion and sale of grain were established in each of the 
19 regions into which the country is subdivided for 
the purposes of the Reichsndhrstand. These associa- 
tions were given the power not only to determine 
the exact amount of grain to be delivered by each 
producer and the place where it was to be turned 
over, but also to close for a time or altogether any 
wholesale or retail stores, mills, or bakeries which 
they considered economically unsound or undesir- 
able. The owner of enterprises thus closed were en- 
titled to an indemnity which was eventually to be 
provided by their competitors who had benefited by 
the measure. The same ordinance of July 14, 1934, 
introduced fixed prices for grain. The prices decreed 
in 1933 had been merely minimum prices; and the 
new prices were from 5 to 7 per cent higher than 
these minimum prices of 1933. This regulation in- 
volved a loss to the farmers; but this was, oflScially, 
held to be a voluntary concession on their part to 
the consumers and a manifestation of the spirit of 
“national solidarity.” In the case of fats, eggs, but- 
ter, cheese and milk the Government created sales 


monopolies; that is, no such commodity was per- 
mitted to reach the market without the preliminary 
approval of an appropriate Government office. These 
sales-monopoly boards do no trading themselves, 
but tiiey have ample means at their disposal for the 
regulation of the volume o| supplies and the influ-- 
encing of prices. 

This brief survey of the State’s intervention in 
the production and distribution of foodstuffs will 
suffice to give an idea of ilie far-reaching methods of 
the Reichsndhrstand. There is some difference of 
opinion among the officials of the organization itself 
as to whether these measures should be held to be a 
definite policy or merely emergency legislation, due 
m part to the protracted drought which in 1934 
caused great alarm in Germany. This, however, is 
not the opinion of Darre who declared early in 1934 
that the system of control of agricultural production 
and prices might be used as a model for tlie applica- 
tion of similar methods of industry. It was hoped 
that some of the most vexatious measures of control 
might be abandoned in 1935, but these hopes have 
not been fulfilled. 

As to the general effect of State control of agri- 
culture it has largely succeeded in maintaining the 
level of prices, although this was probably achieved 
at a cost to the consumers. On the whole the sys- 
tem has worked fairly well, except for the so-called 
Fat Plan, which originated with Dr. Hugenberg and 
was designed to make Germany self-supporting in 
fats. The execution of this plan proved so costly 


that at the end of 1934 it had practically to be aban- 
doned. Agricultural conditions in Germany are ex- 
ceptionally favorable for State control. Supply and 
demand have been very nearly balanced, but not 
quite; and there is in foodstuffs a slight deficiency 
which is made good by imports. This offers prac- 
tically ideal conditions for Government intervention. 
It is far less certain that it would be equally success- 
ful if tried in the field of industry. 


The rapidly growing burden of agricultural in- 
debtedness had been a matter of concern to the Gov- 
ernment. Several measures for its reduction had 
been taken by Hitler’s predecessors, beginning with 
1931. A radical move in this direction was made by 
National Socialism in July 1933, when the whole 
structure of farm indebtedness and interest charges 
was drastically revised with a view to bringing them 
into line with the earning capacity of the farms. The 
Government here assumed heavy liabilities in order 
to relieve the situation of the mortgage banks, whose 
position would otherwise have been seriously af- 
fected. The farmers, moreover, benefited by a num- 
ber of important readjustments in the system of 
taxation that were designed to encourage them to 
proceed with various improvements. 

The National Socialist Government has also con- 
tinued to maintain the policy of the Empire and the 
Weimar Hepublic in the matter of home coloniza- 


tion (Bauemsiedlung). There has been no attempt 
so far to expropriate the large estates and to convert 
them into small holdings. It has been the policy of 
the new Government to increase the average size of 
the holdings so as to bring them into the class of 
hereditary farms. This policy was merely the accen- 
tuation of a tendency that had already manifested 
itself in previous years. In 1934, 144,600 hectares 
were converted into small holdings, or more than in 
any previous year since the war. The new home- 
steads numbered 4,800. Of these 70.2 per cent were 
holdings of 10 and more hectares, and only 4.7 per 
cent of less than 2 hectares. 

A characteristic venture of the National Socialist 
Government is the so-called Bhon or Dr. HeUmuth’s 
plan. The Rhon is a small mountain region of vol- 
canic origin bordering on Thuringia, Franconia and 
Hesse. Dr. Hellmuth is the National Socialist leader 
(Gauleiter) and President of the Government of 
Main-Franconia of which the ancient city of Wurz- 
burg, the former seat of the Prince-Bishop, is the 
capital. The Rhon is within Dr. Helhnuth’s juris- 
diction. For a number of historical reasons the Rhon 
is a very poor country. It has a population of some 
130,000, and they lead a miserable existence chiefly 
by agriculture carried on by backward methods on 
narrow scattered strips of land. The people are 
crowded into small villages and hamlets at the foot 
of a chain of mountains or high hills. Rising to some 
2,500 feet this mountain area had few roads and was 
neither inhabited nor cultivated. When the un- 


happy state of the Rhon in general came to Dr. 
Hellmuth’s attention he conceived the idea that it 
offered an opportunity to put into effect some of the 
best ideas of National Socialism. This is how the 
Rhon or Dr. Hellmuth’s plan came into being, and 
this is also the reason why I boarded a train in Ber- 
lin and betook myself to the ancient city of the 

The plan, as one would expect, is based on the 
idea of "Blood and Land." The Rhon mountain area 
is to be converted into fertile fields of the hereditary 
farm type which will be handed over to the local 
peasants and thus restore them to decent living and 
respectability. In order to achieve this truly com- 
mendable purpose roads are being built, marshes 
drained, and an extensive plan of afforestation — to 
offer protection against the winds — ^has been em- 
barked upon. The work is carried on partly by the 
Labor Service and partly by local people who receive 
regular wages. One of the tasks of the Labor Service 
is to clear the fields or rocks and stones and thus 
prepare them for ploughing, a rather formidable and 
thankless job. In the colonization of the reclaimed 
land no compulsion of any kind, I was assured, is to 
be used. The new settlers will come forward volun- 
tarily and will exchange their present scattered 
strips of land for the nice, compact holdings. Their 
former fellow villagers, who remain down in the 
valley, will also indirectly benefit by the new ven- 
ture. There is nothing one could object to in this 
part of the plan, although one may be permitted to 


have certain doubts as to the extent to which the 
land recovered will prove suitable for grain growing 
or even make good pasture land. What I have seen 
of it would justify a guarded optimism. 

But the National Socialist formula is a formula 
with two elements, “Blood and Land.” And, mean- 
while, the first of them has not been forgotten. 
There is in Wurzburg a special bureau for matters 
of population and race policy. And I was there of- 
fered an opportunity to inspect some 16,000 files. 
They contained the family trees of that number of 
Ehon peasants. The family trees are prepared in 
the schools, by the children working under the 
supervision of the teachers. They are checked from 
the church and other records by a special staff and 
the information is also verified by interviews with 
the older members of the community. The purpose 
of this strange procedure, I was told, was not so 
much to detect non-Aryan strains — ^for there do not 
seem to be any Jews in the Rhon — as to examine 
the progenitors in question, from the point of view 
of health, inheritable or other diseases, general be- 
havior, good morals, and so on. The information is 
further cross-checked by giving children intelligence 
tests the results of whidi, it was admitted, were 
sometimes disappointing. That is, children who had 
an excellent ancestry occasionally proved inferior, 
while those who were cursed with a drunken father 
and a depraved grandmother did unusually well. 
But the youthful investigator into race mysteries, 
who made these compromising admissions, expressed 


the hope that things might straighten out in the 
next generation. It is on the ground of this in- 
formation that the eligibility of the Rhon peasant 
for the new farms will be decided. I remarked to 
the very kind and earnest head of the Wurzburg 
office that it was not always possible to be certain of 
the paternity of a child. It took some time to make 
him admit the fact, but he then added hurriedly that 
such things did not happen in the Rhon. A couple 
of young S. A. and S. S. men who had been follow- 
ing our conversation seemed to be less sure about 
that than was the distinguished professor. Germany 
is, indeed, suffering from a strange obsession. 


The balance-sheet of Italian and German agricul- 
tural policy is somewhat uncertain. There is no 
doubt that the two countries have made a very great 
effort to deal with the question of farming and food 
supply. They have been largely successful in achiev- 
ing self-sufficiency in foodstuffs, although this success 
has been purchased rather dearly. Self-sufficiency 
in foodstuffs, moreover, is in no way peculiar to 
Fascism and National Socialism. The Weimar Re- 
public had a similar objective and took a number of 
measures in this direction, especially in its later 

The changes that have been brought about in the 
condition of farmers and agricultural laborers are 
less certain. They have been helped as producers by 



the respective government policies for the mainte- 
nance of the level of prices; but they have suffered 
as consumers from the resulting higher cost of living. 
They have also had to undergo an unusually large 
measure of government control and supervision. It 
may be no exaggeration to say that the right of land 
ownership has, in Italy and in Germany, suffered an 
important modification. Ownership of land is no 
longer regarded as an absolute right of property, but 
rather as a kind of trusteeship. It is an ownership 
that can be drastically interfered with, and even 
brought to an abrupt end, if the State considers that 
the owner does not perform what is believed to be 
his social duty. So far, actual instances of the more 
drastic forms of State intervention have been rare, 
but the change in attitude is unmistakable. And this 
attitude, from what we know of Fascism and Na- 
tional Socialism, is by no means incompatible with 
their ideology. 




A DISCUSSION of the financial and commercial pol- 
icies of Italy and Germany does not, strictly speak- 
ing, come within the scope of this volume for the 
simple reason that there is no such thing as the 
financial and commercial policy of a totalitarian 
State. No government, either democratic or dicta- 
torial, not even that of the Soviet Union, has yet 
succeeded in harnessing the great economic forces 
that rule our complex civilization. A brief survey of 
the financial and economic situation in the two 
countries is nevertheless essential in order to com- 
plete the picture. For whatever one may choose to 
say about the primarcy of politics over economics, 
it is to the economic exigencies that, sooner or later, 
one has to bow. In striking contrast with the poli- 
tical, social and cultural programs of Fascism and 
National Socialism, their economic policies show a 
remarkable continuation of those of their predeces- 
sors. The changes that have taken place have 
largely been dictated by expediency and not by 
ideological considerations. It is not surprising, there- 



fore, to find a striking similarity between the finan- 
cial and economic measures of Fascism and National 
Socialism and those adopted in practically every 
other country, especially since the beginning of the 
depression. Prohibitive tariff barriers, the obstinate 
fostering of domestic industries at a heavy cost to 
the consumer, import and export licenses and quotas, 
government subsidies to industry, agriculture and 
shipping, public works, unbalanced budgets, surrep- 
titious credit expansion, pressure on banks to make 
them absorb government securities, manipulation of 
currencies — ^all these familiar devices for capturing 
prosperity or doctoring economic evils are, unfor- 
tunately, by no means peculiar to dictatorial 
regimes. They can, indeed, under the most benevo- 
lent of democracies develop and flourish on a scale 
that no dictator has yet succeeded in even approach- 

One important point must be cleared up before 
we proceed any further. In both Italy and Germany 
much has been written in favor of autarchy or com- 
plete economic independence of the outside world. 
This objective has been advocated by the supporters 
of Fascism and National Socialism in part as an im- 
portant step toward the creation of that ideal com- 
munity in which all economic activities will be har- 
moniously balanced, and in part as a condition of 
national security in time of war. Germany has not 
forptten the bitter lesson of the Allied blockade, 
which proved probably the most effective method of 
breaking down the resistance of the Central Powers. 


And, since the application of economic sanctions by 
the League of Nations in November 1935, Italy has 
been learning the same bitter lesson. We know al- 
read}' that, from the beginning, the drive for self- 
sufficiency in foodstuffs was one of the avowed aims 
of both Fascism and National Socialism. Complete 
autarchy, on the other hand, has never been 
acknowledged to be among the aims of either regime. 
The numerous measures to replace imported raw 
materials by domestic substitutes have been the out- 
come not of ideological considerations, but of dire 
necessity and they were rcluetantly embarked upon. 
The reason for this refusal of the leaders of the two 
countries to follow the wishes of the more extreme 
theorists is self-evident. The finaneial and economic 
mechanisms of our modern world so closely inter- 
lock that absolute autarchy is, practically, an im- 
possibility. It could perhaps be made actual, but 
to do it would mean a tremendous sacrifiee for 
everyone concerned. It could be done only at a high 
price in painful readjustments, aceompanied by a 
general lowering of the standard of living, in a large 
country like the United States or the Soviet Union, 
each of which has a vast domestic market and al- 
most unlimited supplies of virtually all raw mate- 
rials. It would be nothing short of madness and sui- 
cide in countries such as Italy and Germany which 
depend on foreign markets and lack some, if not all, 
of the most essential raw materials. 

The advocates of autarchy have been, I think, far 
more outspoken and persistent in Germany than in 


Italy. But the Hitler Government could not over- 
look the fact that even in 1931 — that is, in the third 
year of the depression — ^more than 36 per cent of 
Germany’s total industrial production was exported. 
According to Dr. Wilhelm Ropke this meant that 
almost 10 million Germans or about 15 per cent of 
the entire population depended for their living upon 
export trade. This may be the reason why the Na- 
tional Socialist Government has taken pains to indi- 
cate very clearly that it does not share the views of 
autarchy’s advocates. An ofBcial survey of economic 
conditions and relations in Germany during 1933, 
issued by the Ministry of Economics, says in part: 
“Protectionism . . . has, in these last few years, 
everywhere been spreading. If this continues it 
must, necessarily, lead to growing economic isolation 
among the nations and to an ever-increasing degree 
of economic self-suflBciency. In the long run this 
would mean the return to the primitive conditions 
of bygone ages. This cannot be the aim of Germany 
or of any other country whose interests lie in world 
trade. For, in spite of tendencies to make countries 
economically independent, it is generally realized 
that modem facilities for transportation and trade 
must be used to equalize the climate and geological 
diJEferences between continents and between coun- 
tries, and bring about a closer spiritual cooperation 
among the nations.’’ Dr. Schacht has been a con- 
sistent and untiring advocate of the liberalization of 
international trade, although it became his painful 
duty to devise and enforce some of the most rigid 


import and export restrictions that have thus far 
been attempted by any country in time of peace. In 
his speech at the Leipzig Fair on March 4, 1935, Dr. 
Schacht declared that “National Socialism sees in 
orderly economic relations between nations an essen- 
tial and indispensable cultural factor and is there- 
fore ready and willing to cooperate in the restoration 
of world trade." This statement of the Minister of 
Economics and President of the Reichsbank was 
given wide publicity and may be held to represent 
the official policy of the National Socialist Govern- 
ment. Hitler gave this doctrine supreme unction in 
his speech of May 21, 1935, when he described “the 
idea of economic autarchy in any country" as “silly 
and its effect harmful to Ae Nation." The measures 
for economic self-sufficiency, therefore, which have, 
under duress, been taken by Italy and Germany can- 
not be rightly regarded as by-products of the ideol- 
ogy of the two movements but are merely, to repeat, 
the unhappy results of a situation that is beyond the 
control of the respective Governments. 

italt’s fundamental weakness 

Since the beginning of the East African war and 
the imposition of sanctions by the League of Na- 
tions the fundamental economic weakness of Italy 
has attracted so much attention that it seems almost 
superfluous to allude to it again. It is weakness 
growing out of Italy’s dependence on imports for her 
fuel and her chief raw materials. She has to import 


practically the whole of her coal, oil, iron, steel, cop- 
per, lead, zmc, manganese ore, cotton and wool. She 
has no rubber, tin, nickel or chromium. In order to 
pay for these fuels and raw materials she must nec- 
essarily sell to foreign countries services and goods. 
The other two important items in Italy’s balance of 
payments were tourist expenditures and emigrant 

When a country is making fairly rapid progress 
toward industrialization but depends wholly upon 
the outside world for its essential supplies, one need 
not elaborate upon the vulnerability of its position. 
Italy’s diiOBiculties began even before the depression, 
and they originated, at least in part, in the overvalu- 
ation of the lira at the time of its stabilization in 
December 1927. In a notable speech at Pesaro on 
August 18, 1926, Mussolini laid down the basis of 
Italian monetary policy. “I will defend the lira to 
the last breath, to the last drop of blood," he de- 
clared. 'T will never inflict on this splendid Italian 
people who have been working for the last four 
years under the most self-denying discipline, and 
who are prepared to make further and even heavier 
sacrifices, the moral shame and the economic calam- 
ity of the collapse of the lira.” The Pesaro speech 
has been carved in stone and the Fascist Govern- 
ment has made truly heroic efforts to live up to the 
promise of the Duce. The maintenance of the lira 
at too high a level naturally tended to raise Italian 
prices, and thus weakened the competitive position 
of Italian industries in the world market. On the 


other hand, the overvalued currency permitted Italy 
to secure foreign raw materials at a lower real cost. 
But the effect of overvaluation, on the whole, was 
distinctly unfavorable to Italy’s economic position. 
The usual explanation of the high parity, in terms of 
foreign exchanges, adopted in 1927, is that it was 
due to considerations of national prestige. It will be 
remembered that Great Britain had a somewhat 
similar experience when in 1925 the pound sterling 
was reestablished on a gold basis at too high a level. 
But, while England after a bitter struggle was, in 
September 1931, finally forced off the gold standard, 
Italy refused to follow any such course. Even after 
the outbreak of the East African campaign and the 
ensuing international complications, the Fascist 
Government continued to cling to the official gold 
parity of the lira, although by the end of July 1935 
the 40 per cent gold cover for notes in circulation 
had been suspended. The reason for such a policy 
was perhaps not merely the desire to live up to the 
promise given by the Duce at Pesaro, and since 
then many times reiterated, but also the need of 
maintaining the confidence of investors in the stabil- 
ity of the domestic currency. For the Italian Treas- 
ury depends largely on the home market for the fio- 
tation of government obligations made necessary 
for the financing of budget deficits and programs of 
public works. 

The maintenance of a surplus from which the nec- 
essary raw materials could be paid for has been one 
of the chief preoccupations of the Italian Govern- 



ment. It led the Government to take a series of 
measures the purpose of which was, on the one hand, 
the fostering of Italian exports and, on the other, 
the cutting of imports to the bone. There was to be 
an elimination of everything not considered abso- 
lutely essential. The devaluation of the pound ster- 
ling and of currencies based on sterling in the early 
autumn of 1931 and, in its turn, the devaluation of 
the dollar in the spring of 1933 added further to the 
financial difficulties of Italy. It is true that devalua- 
tion cheapened raw materials purchased abroad with 
Italian currency and thus reduced the cost to the 
manufacturers. Moreover, the Treasury and certain 
private concerns derived a benefit from reduced in- 
terest charges on obligations payable in pounds and 
dollars. The volume of such obligations, however, 
was not great for Italy’s foreign indebtedness has 
been kept at a notably low level. As over against 
these advantages, the depreciation of foreign cur- 
rencies created new and formidable difficulties for 
Italian exports and it further intensified the evil 
effects of a depression that was accompanied by a 
catastrophic dwindling of international trade and a 
like dechne in world prices. Members of the Italian 
Government and high officials of the Ministry of 
Finance never fail to point out that the depreciation 
of the pound and of the dollar constitute a factor of 
importance in this multiplication of Italy’s difficul- 
ties. Many of them make it no secret that in their 
opinion the devaluation of the dollar and the subse- 
quent repudiation by the United States Government 


of the gold-clause provision of its obligations were 
not the result of economic and financial necessities, 
but merely of amateurish experimentation with 
questionable economic theories. This opinion is, 
perhaps, not entirely devoid of foundation and is 
shared by a large number of economists and business 
men in this country. 

Italian import trade declined from 21,665 million 
lire in 1929 to 7,667 million lire in 1934; the respective 
figures for exports are 15,236 million and 5,225 mil- 
lion. The unfavorable balance of trade was thus re- 
duced from 6,429 million lire in 1929 to 2,441 mil- 
lions in 1934. But this reduction in the deficit can 
hardly be considered an improvement since the ratio 
of imports to exports did not suffer any substantial 
change. For the first nine months of 1935 Italian 
imports amounted to 5,649 million lire and exports to 
3,681 million, which leaves an unfavorable balance of 
1,968 million. Compared with the corresponding 
figures for 1934, imports declined by 21 million lire 
and exports by 140 million. Italian foreign trade 
during this period was dominated by military con- 
siderations, dictated by the East African expedi- 

The two other important items in Italy’s balance 
of payment — tourist expenditures and emigrant re- 
mittances — fared almost as badly. Under each of 
these headings Italy had a favorable balance of 
over 2,000 million lire in 1929. In 1932 the receipts 
from each of these sources is believed to have been 
reduced to less than half the figure for 1929. 




These are the chief economic factors that deter- 
mined the financial and commercial policies of the 
Fascist Government. And it must always be kept in 
mind that they developed against the background 
of an unparalleled world-wide depression. The two 
pillars of Italian financial policy were the “battle for 
the lira” and the balancing of the budget. Eiiough 
has been said of the former. Any inquiry into the 
budget situation presents great technical difficulties 
owing to the fact that the official figures for the vari- 
ous years are not, strictly speaking, comparable. 
Nevertheless the available computations indicate 
that from 1924-1925 to 1929-1930 the budget was 
balanced with the exception of the fiscal year 1927- 
1928, when there was a deficit of some 200 million 
lire. Beginning with 1930-1931 the situation grew 
worse, the budget could not be balanced and, in 
1933-1934, the deficit reached the alarming figure of 
6,458 million lire, an increase of 2,836 million over 
the deficit of the previous year. This great increase 
in the deficit of 1933-1934 is explained by the huge 
conversion operation undertaken by the Treasury in 
April 1934 at a considerable immediate cost to the 
Government. The general growth of the deficit re- 
sulted from the shrinkage of revenue due to the dete- 
rioration of business conditions and the program of 
public works embarked upon by the Government. 

The desire to maintain Italy’s export position 
without devaluing the lira led the Government to 


pursue a deflationary policy. Stern measures were 
taken to cut down costs. In December 1933 the offi- 
cial bank discount rate was reduced to 3 per cent, 
the lowest in the financial history of the Kingdom. 
Labor costs were stabilized at a low level tlirough 
the operation of the collective contracts accompa- 
nied, as we have seen, by a substantial reduction in 
real ivages. By a decree of November IS, 1930, all 
salaries and wages were reduced by a definite ratio 
which, in certain cases, was as much as 12 per cent. 
In April 1934 the operation was repeated and here 
the decreases were from G to 20 per cent, the higher 
percentage applying to the salaries of the members 
of the Government. By other edicts of the Govern- 
ment rents were twice reduced by 10 per cent, and 
once by 12. At the same time prices were cut in pro- 
portion to the reduction of earned incomes. This 
also was done by government decree. The measure 
was effectively enforced largely through the pressure 
brought upon commercial establishments by the 
Fascist organizations. The burden of taxation, ac- 
cording to Mussolini’s own statement in the Cham- 
ber of Deputies on May 26, 1934, had reached its 
limit and could not be increased any further. 

Deflationary policies had in Italy exactly the 
same effect as they have had in every other country. 
They brought with them unemploj'ment and much 
hardship for a large number of people. This forced 
the Government to expand its program of public 
works and to use various employment-creating de- 
vices which were accompanied by a certain degree of 


credit inflation. The deflationary measures failing 
to improve Italy’s export position, the Government 
had seen itself forced to follow a policy of restricting 
imports in order to preserve all available reserves 
of foreign exchange as sources of payment for neces- 
sary raw materials. Italy has been for many years 
a country with a high protective tariff. Nevertheless 
the Fascist Government showed great reluctance to 
use the most objectionable methods of protection, 
such as import and export licenses and quotas. And 
it was only in the end that it entered the path on 
which so many other countries had preceded it. Spe- 
cial legislation passed in 1933 empowered the Gov- 
ernment to impose heavy surtaxes on commodities 
imported from countries which discriminated against 
Italy, especially through the application of quotas 
and licenses. In April 1934 import quotas were put 
into effect but only for articles on a restricted list. 
In the months that followed, however, the list was 
extended; and in April and June 1935 Italy’s entire 
import trade was forced into the straitjacket of ilie 
most rigid of quota systems. Control over holdings 
of foreign securities and currency was also concen- 
trated in the hands first of the Bank of Italy (De- 
cember 1934) and, after May 1935 in those of the 
Superintendent of Foreign Exchanges, Professor 
Felice Guarneri. A decree of the Council of Minis- 
ters, issued in the midst of the military maneuvers 
at Bolzano on August 28, 1935, directed all Italians 
possessing foreign investments to turn them over to 
the Government in exchange for 5 per cent Italian 


Treasury bonds. The same decree limited dividends 
to 6 per cent, the balance to be invested in govern- 
ment securities, and imposed a 10 per cent tax on all 
dividends, paid by Italian corporations. These were, 
of course, purely war measures. 

The same desire to safeguard all available re- 
sources in order to be able to purchase essential raw 
materials led the Government to take a number of 
measures designed to diminish the use of certain 
commodities which could be replaced by domestic 
substitutes. Most important among them was a 
project providing for the development of electric 
power to take the place of coal, and other projects 
for the production of artificial fibre and synthetic 
gasoline. A decree of August 28, 1935, made the use 
of synthetic gasoline mandatory for aU public vehi- 
cles after December 31, 1937. It is hardly necessary 
to add that all these measures have been difficult to 
enforce and very costly. They represent, no doubt, a 
distinct move toward autarchy, but a move which is 
the result of the depression and of the international 
situation, and not of the ideology of Fascism. The 
creation at the end of July 1935 of government 
monopolies for the purchase abroad of coal, tin, cop- 
per and nickel had the same purpose, that of elimi- 
nating unnecessary imports and of creating a “bal- 
anced” trade, i.e., the diverting of Italian orders to 
countries which would reciprocate by taking Italian 
goods. A similar intention inspired a number of 
“barter” agreements entered into by Italy with Po- 
land, Turkey, Austria, Hungary, Germany and 


Brazil. These agreements provided for a direct ex- 
change of goods between the countries concerned, 
and it was hoped that they might help to a certain 
extent to mitigate the rigidity of export and import 

This complex system of measures, which was not 
essentially different from that found in so many 
countries, was no more successful in Italy than it 
was anywhere else. The gold reserve of the Bank of 
Italy, which stood at 5,052 million lire in 1928, rose 
to 7,099 million in January 1934, but has steadily 
decline since. In January 1935 it had dropped to 
5,822 million, and on October 20, 1935, reached a 
new low of 3,936 million. The decline was particu- 
larly rapid after July 23, 1935, when the minimum 
cover of 40 per cent was suspended. It is the avowed 
intention of the Government to sacrifice the gold re- 
serve to the financing of ttie East African war. The 
internal debt increased between 1922 and 1935 by 
31,295 million lire, and on January 31, 1935, showed 
a total of 105,004 million lire. Most of the new debt 
has been due to expenditures on public works and 
improvements of various kinds and has, therefore, 
gone to increase the nation’s real assets. But it is 
by no means certain that all such investments can 
be classified as “productive” ; and the burden that 
future generations will have to carry has also inevi- 
tably been increased. The Bank of Italy, on the 
other hand, has been successful in keeping down the 
volume of notes in circulation. It was reduced from 
17,992 million lire in 1927 to 12,420 million in April 


1934, and had increased only very slightly — to 12,787 
million — on January 31, 1935. On August 20, 1935, 
the volume of notes in circulation stood at 13,707 mil- 
lion lire. There was a considerable revival in indus- 
trial production in this last year. The League of Na- 
tions index for Italy (1928=100) declined to 73 in 
1932 but rose sharply to 88.3 in 1934 and to 102.1 
in June 1935. This revival, which has already ap- 
proached the dimensions of an industrial boom, was 
due entirely to government orders connected with 
the East African war. 

All the efforts of Italy to maintain her trade and 
financial position have been brought to an abrupt 
end by the action taken in Geneva. Since the appli- 
cation of economic sanctions on November 18, 1935, 
and its possible extension to the most vital of Italian 
imports, the Rome Government has been confronted 
with problems of complete autarchy in its most 
unwelcome guise. 

Germany’s position 

The financial and economic questions that Hitler 
had to face when he assumed power in January 1933 
were, if somewhat different, certainly not less for- 
midable than those that presented themselves to 
the attention of Mussolini. In Italy a much larger 
proportion of the population is engaged in agricul- 
ture than is the case in Germany, and the Italian 
peasants and workers have, to a much greater extent 
than have the Germans, retained the gift of being 


able to live on very little, sometimes on almost noth- 
ing, without being too unhappy. The one great con- 
solation of always being poor is that one has noth- 
ing to lose. 

Since 1933 Germany's financial and commercial 
policies have been determined by four major factors: 
dependence on foreign markets for the consumption 
of the exported products of her industry and also 
her ability to import some of the raw materials es- 
sential to her; increasing diflSculties in obtaining 
foreign currencies; the huge internal and foreign 
debt inherited by the Third Reich from its predeces- 
sors and from the balmy era of mctravagant inter- 
national financing that ended so pitifully in 1929- 
1931 ; and the 6 million unemployed who contributed 
in no small degree to the success of the National 
Socialist movement and whom Hitler promised to 
put back to work. 

I have already said that in 1931 more than 36 per 
cent of the total industrial production of GCTmany 
was exported. If this percentage has considerably 
declined since, this was not because but in spite of 
the efforts of the Government of the Reich. It is 
estimated that Germany depends on imported raw 
materials to the extent of 40 to 45 per cent of her 
entire consumption. In 1934, 58 per cent of her total 
imports consisted of raw materials. The cotton, jute, 
and silk industries depend entirely upon them. In 
1934 the heavy industries and manufacturers of 
leather used imported raw materials to fihe extent 
of 60 per cent. For certain other important indus- 


tries, such as margarine, beer and tobacco, the cor- 
responding percentage was 35. About 90 per cent 
of Germany’s raw wool and 96 per cent of her flax 
came from abroad. She has no rubber. In 1934, 32 
per cent of her consumption of motor fuel and as 
much as 80 per cent of her consumption of gasoline 
were of foreign origin. 

In order to pay for these imported raw materials 
Germany must necessarily export manufactured 
goods or those natural products that she possesses in 
surplus quantity, such as coal. But, since the de- 
pression her foreign trade has dwindled to less than 
one-third of what it was in 1928. In that year her 
imports amounted to 14,001 million marks and her 
exports to 12,276 million. In 1933 the respective 
figures were 4,204 million and 4,871 million, leav- 
ing a favorable balance of 667 million marks. In 
1934 this balance was reversed. The imports in- 
creased to 4,451 million, and the exports declined 
to 4,167 million, producing a deficit of 284 million. 
The situation improved but slightly in the first six 
months of 1935. During this period the imports 
amount to 2,127 million marks and the exports to 
1,962 million, leaving a deficit of 165 million. 

Confronted with a trade balance that was becom- 
ing constantly more unfavorable, the Government 
entered upon a policy of reducing imports drasti- 
cally and of promoting exports no less drastically. 
The reduction of imports has taken two different 
lines: a rigid control of all imports by special agen- 
cies and the giving of every encouragement to the 


production and use of such substitutes as can be 
used in place of materials formerly imported from 
abroad. The control of imports went through a num- 
ber of preliminary stages and finally culminated in 
the introduction in September 1934 of the so-called 
“New Plan” which was the creation of Dr. Schacht. 
Under the “New Plan” 25 boards have been estab- 
lished, one for each of the chief imports; and only 
consignments of imports for which the boards have 
issued permits are allowed to enter. The granting 
of the import permit depends not only on the im- 
portance of the consignment itself but also on the 
available supply of foreign exchange. In spite of 
these rigid restrictions the balance of German 3 r’s 
foreign trade, as we have seen, continued to be un- 
favorable during 1934 and in the first half of 1935. 
In August 1935, however, the trend was reversed. 
German imports were 318 million marks, while ex- 
ports rose to 373 million; thus a surplus of 55 mil- 
lion marks resulted. 

There is no way of knowing at the time of writ- 
ing whether this trend is likely to continue. This, 
however, is not impossible, for the increase in the 
monthly volume of exports — the August 1935 figure 
is the highest since March 1934^may well be due 
to the effects of Dr. Schacht’s “Export Subsidy 
Plan.” The Export Subsidy Plan is the outcome of 
the Law of June 28, 1935, which bestowed on the 
Chamber of Economics the power to impose a levy 
on business firms and associations, the proceeds of 
which levy were to be used to finance exports and 


put German exporters in a more favorable position 
in the international market. Officially, the levy is 
a “voluntary” one. That is, those who pay are 
“voluntarily” making a contribution which will 
keep Germany from being charged with dumping, 
and which, at home, will remove any impression 
that this levy is merely a new sales tax that the con- 
tributing jSnns and associations will simply pass 
along to the consumer. It has not yet been stated 
what amount can thus be placed in the hands of Dr. 
Schacht, but it is believed that it will be something 
between 720 and 1,000 million marks. And it means, 
of course, the laying upon industry of a very heavy 

The Government program for the cutting down of 
imports likewise provides for jEirst, the production 
of various substitutes such as synthetic rubber, syn- 
thetic gasoline and artificial fibre (Fistra), and then, 
second, for the giving of aid to the domestic devel- 
opment of branches of industry that have been neg- 
lected in the past, such as the production of wool, 
flax, lead, zinc and other raw materials usually im- 
ported from abroad. This program includes a variety 
of measures. Among them are regulations for the 
compulsory admixture of domestic raw materials — 
for instance, the mixing of alcohol with gasoline; 
premiums and subsidies; guaranteed prices, in the 
case of wool, for instance, to encourage sheep breed- 
ing; freedom from taxes on investments, with the 
object of developing new branches of production; 
and credits which the Government permits the Min- 


istry of Finance to advance “for the forwarding of 
the domestic production of raw materials.” There 
is also a complicated system of clearing agreements 
with various countries, and much encouragement is 
given to the promotion of foreign trade on a “barter” 
basis. The utmost that can be said in favor of these 
involved and often vexatious measures is that they 
have prevented foreign trade from expiring alto- 
' gether. They certainly have done little to inject new 
life into it. The Germans themselves are under no 
illusions about it, and Dr. Schacht has spoken of his 
“New Plan” as a distasteful product of extreme 

Germany’s financial policies 

The unhappy condition of Germany’s foreign 
trade, together with the drastic shrinkage of the “in- 
visible” items of her balance of payments — ^tourist 
expenditures, shipping, insurance and banking — 
meant great difficulties in obtaining the foreign ex- 
change necessary for the payment for essential raw 
materials and meeting the interest charges on Ger- 
many’s foreign debt. The gold reserve of the Reichs- 
bank had already been used by Hitler’s predecessors 
to stop the gap left by the consistently adverse bal- 
ance of payments. On December 31, 1928, the gold 
and foreign currencies reserve of the Reichsbank was 
2,884 million marks. It had declined to 920 million 
on December 31, 1932, to 449 million on May 31, 
1933, and to 136 million on May 31, 1934. During 


the first six months of 1935 the gold reserve was 
maintained at about 86 million marks and at the 
end of June it was 89 million. 

Confronted with this situation and its inability to 
obtain foreign exchange, the Government resorted 
to the first of a series of measures that resulted in 
the declaration of a moratorium on the transfer of 
interest due on its foreign debt. The debt itself was 
not repudiated, but since then interest has been paid 
in German marks and only a small fraction of such 
currency payments is permitted to be transferred 
abroad. This suspension of transfers has, since July 
1, 1934, been very nearly absolute. The transfer 
moratorium was brought about by the renewal and 
revision of the so-called “standstill agreements” 
which first came into effect in September 1931. The 
revisions were accompanied by fresh negotiations 
between the German Government and its foreign 
creditors, negotiations from which the unhappy cred- 
itors invariably emerged in a position worse than 
that in which they had found themselves before. 
One of the by-products of the agreements that led 
to the moratorium was the issue by Germany to its 
creditors of non-interest bearing scrip which, under 
certain complicated and involved conditions, could 
be used for financing German “additional exports.” 
This method of financing “additional exports,” first 
introduced in 1932, was originally directed against 
countries that obtained export advantages by depre- 
ciating their currencies and, since 1933, it had come 
more extensively into use. A second means of financ- 


ing such exports was found in German bonds pur- 
chased on the foreign market and the so-called 
‘'blocked marks.” Both scrip and blocked marks rep- 
resent assets that cannot be transferred abroad but, 
under certain conditions, may be used to pay for ex- 
ports from Germany. They can be obtained at a con- 
siderable discount. The whole procedure is one of 
extreme complexity and has led to much friction. 

Through all her financial and economic difficulties 
Germany has steadily clung to a determination to 
maintain the mark at its gold parity. There has 
been much pressure from German exporters in favor 
of devaluation, but it has met with no response from 
the Government, especially since Dr. Schacht came 
to the Ministry of Economics in August 1934. At 
the end of the same month he spoke at Bad Eilsen, 
before the International Conference on Agricultural 
Science and delivered an address that atferacted 
much attention. He argued strongly against devalu- 
ation, chiefly on the ground that practically the en- 
tire foreign debt of Germany had been contracted in 
terms of foreign currencies, and devaluation would 
therefore largely increase the debtor’s burden. He 
also expressed the opinion that devaluation would 
not greatly help exporters, for German industry de- 
pended on imported raw materials, the cost of which 
would necessarily be increased. This would eventu- 
ally lead to higher prices, a higher cost of living and 
higher wages. The lower value of the mark in terms 
of foreign currencies would also mean lower receipts 
from exports, and it was questionable whether this 


loss would be compensated for by an increase in the 
export volume. Dr. Schacht, moreover, argued that 
the general psychological effect of devaluation would 
be disastrous. He insisted on the necessity of a com- 
plete moratorium for several years, and the need of 
a drastic downward revision of Germany’s debt 
structure, with a view to bringing it into keeping 
with the country’s capacity to transfer. 

The situation is paradoxical. The mark has no 
gold backing to speak of. Germany’s financial weak- 
ness, internationally, is a fact of common knowledge. 
Yet the mark retains its official parity in terms of 
foreign exchange, although the various kinds of 
blocked marks are quoted at a considerable discount. 
At the same time currencies of nations such as Great 
Britain and the United States, whose financial and 
economic position is infinitely stronger than that of 
Germany, were subject to considerable fluctuations. 
The mystery is explainable in several ways. First 
of all is Germany’s drastic curtailment of the serv- 
ice of foreign debt through the operation of transfer 
moratoria and the “standstill” agreements. Another 
important element is the absence of any currency 
inflation. The circulation of Reichsbank notes and 
other media of exchange has remained practically 
stable, fluctuating in narrow limits around 5,750 mil- 
lion marks. And lastly, the German Government 
has taken drastic measures to prevent the export of 
paper marks. This amounts to a virtual embargo 
and is rigidly enforced. All infractions of these regu- 
lations are punished by heavy fines and imprison- 


ment. The system has worked thus far. But, Dr. 
Schacht’s argument notwithstanding, it is probably 
detrimental to industry, which, moreover, is bur- 
dened with the heavy “export subsidy.” 

By the devaluation of the pound sterling, the dol- 
lar and other currencies, German exports have inevi- 
tably been affected adversely. But, on the other 
hand, public institutions and private concerns that 
had floated loans in terms of these foreign curren- 
cies greatly benefited by the devaluation. An esti- 
mate published in November 1935 by the Berlin In- 
stitute for Business Research indicates that to pri- 
vate administrative bodies alone the profit resulting 
from devaluation has amounted to some 1,900 mil- 
lion marks and that all private German debtors have 
benefited accordingly. As a result of the moratorium 
of transfers debtors were in a position to purchase 
their foreign bonds at a mere fraction of their face 
value. The total German foreign indebtedness, 
which stood at 23,200 million marks in February 
1933 has since then greatly decreased. In May 1934 
it was oflBicially reported to have fallen to 17,900 

Any investigation of the present condition of the 
German budget is faced by practically insurmount- 
able difiiculties. A vital item in German public ex- 
penditures since 1933 has been the outlay for public 
works, various labor-creating devices, and arma- 
ment. These expenditures are largely financed 
through the issue of “employment bills” which are 
short-term obligations but are renewable and are, for 


all practical purposes, long-term obligations. The 
"employment bills,” moreover, are issued by various 
semi-official organizations disguised under innocuous 
names. The amount of such obligations has never 
been officially given out, and in the absence of defi- 
nite information one has to rely on private compu- 
tations. The London Economist estimated in June 
1935 that the total internal debt of the Reich has 
increased, under the National Socialist regime, by 
between 12,000 and 16,000 million marks. This esti- 
mate is not very far from the total quoted to me in 
Berlin by weU-informed persons. The Institute for 
Business Research in November 1935 took exception 
to such estimates and maintained that, at the end of 
June 1935 the entire public debt of Germany, in- 
cluding the Reich, the States and the municipalities, 
was 29,800 million marks. According to the same 
source the increase since the beginning of 1933 has 
been merely 4,340 million marks. The existence of a 
"secret” debt was specifically denied, and the total 
of the "employment bills” was given as some 5,000 
million marks, of which about 1,000 million had 
already been funded. If the Institute for Business 
Research is right, the Economist, and also a great 
many authoritative German observers must be 
wrong. For, to repeat, the consensus of opinion in 
Berlin in the summer of 1935 was that the labor- 
creation program of the Government was financed 
by a surreptitious credit inflation on a scale that 
presented a very real danger to the financial posi- 
tion of the country. 


It is unquestionable that the government policy 
of stimulating business and employment has had its 
effect. But what is doubtful is the soundness of the 
foundation on which this revival has been built up. 
Unemployment has been vastly reduced. The mark 
has been maintained at its official parity in spite of 
the absence of gold. For Germany the League of 
Nations index of industrial production (1928=100) 
has risen from 54 in 1932 to 80.9 in 1934, and 
in June 1935 stood at 95.2. Business has profited by 
the tax reduction program to the extent of 1,135 
million marks, according to a statement made in 
September 1935 to the Nuremberg Congress of the 
National Socialist Party by Herr Reinhardt, Under 
Secretary of State for ilnance. The Bureau of Sta- 
tistics estimates that the national income has in- 
creased from 56,938 million marks in 1932 to 65,707 
million in 1934, But there is also the other side of 
the picture. Foreign trade confined and hampered 
by the “New Plan,” did not and cannot improve to 
any substantial degree so long as world conditions 
remain what they are. The foreign exchange situa- 
tion is as bad as ever. The mark itself is maintained 
on a quasi-gold basis by methods which, if admit- 
tedly ingenious, are also objectionable and neces- 
sarily provisional. 

The industrial revival that Germany experienced 
in 1935 was not due to normal causes. I have al- 
ready quoted,* when discussing German unemploy- 
ment, the interesting report of the Institute for Busi- 

* See above, p. 144 sqq. 


ness Research, which points out that the process of 
business recovery began in the middle of 1932 and 
that its progress since the autumn of 193*1 and espe- 
cially since the spring of 1035 was due largely to the 
Government’s rearmament program. Both these ad- 
missions are of considerable interest, the first be- 
cause it is in flagrant conflict with the official 
National Socialist theory that would credit the in- 
dustrial revival entirely to the work of the Hitler 
Government. As a matter of fact, however, the up- 
ward trend had begun in Germany while she was still 
under the “Marxist-Liberal” regime, just ns in the 
United States it started under President Hoover. 
But the fact that the present German revival has 
its source in the Government’s rearmament program 
is far more important. It indicates how shifting and 
uncertain is the basis of this recovery. Tins conclu- 
sion is further reenforced by the statement of the 
Institute for Business Research that the revival that 
the consumption goods industries experienced in 
1934 was due to "consumers’ hoarding purchases” 
and to the increase in the number of marriages. Em- 
ployment in these industries later suffered a setback 
from which it had not recovered by the autumn of 
1935. The industries which at present show strong 
improvement are those engaged in manufacturing 
production goods, especially steel and iron, the 
metals in general, machines, vehicles, and optical in- 
struments. The building trades have also been doing 

But if rearmament is the real source of German 



business recovery this does not augur well for 
public finances. The London Economist remarked 
in August 1935 that the reports of the Bureau of 
Statistics on rearmament finance “may be described 
as a private surmise complicated by official confu- 
sion.” No wonder that so many financiers and busi- 
ness men in Berlin feel greatly worried and regard 
the future with much apprehension. 

Dr. Schacht opened his address at the Leipzig 
Fair in March 1935 with the remark that “Economic 
policy is not a science but an art.” And he went on 
to say that while the technique of every art can and 
must be learned, the creative power is something 
one must be born with. Dr. Schacht has undoubt- 
edly a remarkable command of the technique of eco- 
nomics, and he has shown on more than one occasion 
that he has a real insight into the working of the 
intricate mechanics of economic forces. If, therefore, 
the structure of finance and international exchanges 
he has built up in Germany is rather an artifice than 
a work of art, it is the forces beyond the control of 
the Minister of Economics that should be blamed. 
Of the imperfection of his creation Dr. Schacht is, 
moreover, fully aware. 


On a warm evening in the summer of 1935 1 found 
myself on the terrace of a quaint casino of a small 
and little known German spa. It was at the end of a 
very busy day. I had motored in clouds of dust over 


miles and miles of country roads and had visited 
labor camps and peasant settlements, admired swim- 
ming pools and water works still in the process of 
construction, and talked to a host of people, most 
of them young officials of the present Government 
who were eager to show me what they were doing. 
After the somewhat bewildering and boisterous dis- 
play of energy by this new Germany, I was ending 
the day amid surroundings about as far removed 
from all that as if I had entered a different world. 
The buildings of the little old-fashioned spa went 
back to the 1830’s. Its elderly guests might still have 
been living in pre-war days. Its orchestra was play- 
ing Schumann, Bach and Johann Strauss. Indeed, 
the resort had for years been the favorite retreat of 
the head of one of the dynasties that had been swept 
away in the revolution of 1918. The place was still 
full of memories of the old king. With me was a 
pleasant young German, a government officer of the 
new generation, joUy and athletic. Still in his early 
twenties, he had grown up in the atmosphere of 
National Socialism. He had fought the Fuhrer’s 
battle on street comers and had now received his re- 
ward in the shape of an appointment as treasurer of 
the local organization of the National Socialist 
Party. He was full of the most exuberant enthu- 
siasm and boundless devotion to the cause and he 
was immensely proud of his uniform, his badges, the 
importance of his office, his part in the Hitler move- 
ment. To my rather indiscreet question about the 
condition of the finances of his organization, he ex- 



It is an old biblical truth that man does not live 
by bread alone. Fascism and National Socialism, as 
we have seen, are not oblivious of the fact while 
Dr. Ley is inclined to take it perhaps even too seri- 
ously. Propaganda in favor of the respective regimes 
and on a very large scale is carried on in both coun- 
tries. But the Italian and German Governments 
have also taken numerous and effective steps for the 
betterment of many of the public services as a part 
of their extensive programs of public works. The 
resulting improvements receive wide publicity, 
which is occasionally more than their legitimate due, 
and the prestige of the government is accordingly 
enhanced. Any visitor who returns to Italy after an 
absence of several years cannot but be struck by the 
great changes that have taken place in both the phy- 
sical equipment of the country and the attitude of 
the people with whom he has to deal in the ordinary 
business of life. There are many new and very good 
roads, a large number of new libraries, schools and 
other public buildings. The railroad service has been 
vastly improved. Trains run according to schedule, 
something they rarely did before; luggage is no 



longer tampered with in transit and arrives safely at 
its destination. The electrification of many of the 
lines has added greatly to the comfort of the travel- 
ler. There are many good, new athletic fields and 
stadiums, of which the truly magnificent Forum 
Mussolini in Rome is the most shining ex-.nple. The 
seashore and the mountains are dotted with innu- 
merable camps and summer colonies where a great 
proportion of young Italians and not a few of the 
older generation get an opportunity to forget their 
daily toil. For many of the children who come from 
the crowded tenements of the industrial cities these 
weeks in the country, made possible by the Fascist 
Government, are a real revelation. There is an un- 
mistakable change in the attitude of the people 
themselves. Railway porters and taxi drivers are 
much more moderate and far less insistent in their 
demands for extra remuneration, and not infre- 
quently forego it altogether, which is a welcome 
change from an old tradition. Tips in the hotels are 
officially prohibited, and although they are expected 
and gratefully received they are no longer a source 
of unpleasantness. The dignity of labor is not 
merely a phrase in Fascist Italy. 

It is the Eternal City that has undergone the most 
remarkable transformation. Until the East African 
venture the chief practical manifestation of Fas- 
cism's glorification of the Roman tradition took the 
form of extensive archaeological excavations in the 
capital. In the course of this work many familiar 
landmarks disappeared in order that remnants of the 


days of the Caesars might be uncovered. Entire 
sections of the city have gone and have given place 
to new and magnificent avenues such as the Via 
dell’Impero, the Via dei Trionfi and the Via del 
Circo Massimo. They provide appropriate settings 
for the parades of the black-shirted legions. Much 
of this new Roma Mussoliniana is truly admirable, 
but the cramped and swarming lanes that are no 
longer there will be missed by many of Rome’s old 
friends. The fact that in the past the reputation of 
this quarter was not of the best may seem to some 
to be rather cold comfort. Rome has today one of 
the best and most efficient bus services in the world, 
and the skill with which the drivers pilot their heavy 
vehicles through narrow and tortuous streets, where 
one would hardly dare to venture in a Ford, is truly 
amazing. More than that, Rome is now a remark- 
ably clean city, the streets being washed four times 
a day, which certainly was not the case in the past. 
Mussolini has endowed the capital with its own 
bathing beach, Ostia, which can be reached in 20 or 
30 minutes, either by car or electric train. It is 
widely used in the summer by business people, who 
take advantage of the traditionally long midday 
closing of offices to spend a couple of hours in the 
sunshine. For many Romans the customary siesta 
and hours in the osteria are a thing of the past, 
which in itself gives Fascism an excellent claim to 
having accomplished a revolution. There are per- 
haps too many glaring lights in the evening and, un- 
fortunately, Roman nights have not been able to 


escape the deplorable and vulgar practice of search- 
light illuminations of public buildings and monu- 
ments. This makes it practically impossible, until 
the searchlights have been mercifully turned off at 
midnight, to get away from the gleaming lines of 
the huge memorial to Vittorio Emanuele, a memo- 
rial that surely adds little to the beauty of the Eter- 
nal City. This present-day Roma Mussoliniana is 
different from the Rome of fifteen years ago. It is 
symbolic of the Fascist regime. It is more sanitary, 
more eflScient, brighter and bolder than it used to 
be. But something of the refinement and charm of 
the old Rome has been lost in the process of mod- 

Gemany, naturally, did not undergo any such 
striking change. Her trains, since time immemorial, 
have run on schedule, her baggage cars have been as 
safe as the vaults of a bank, and her railroad and 
hotel employees have always been efScient, courte- 
ous and scrupulously honest. Her air service, which 
is one of the best in the world, was a creation of 
Hitler’s predecessors. But there are many excellent 
new motor roads under construction, athletic 
grounds and swimming pools. The number of camps 
and summer colonies for young and old has vastly 
increased under the National Socialist regime. In 
1935 Berlin was in no way different from what it 
had been in 1932, except that one saw a great many 
more men in brown S. A. and black S. S. uniforms. 
As in the past, everything was spotless, orderly and 
peaceful. In the midst of Uie feverish building and 


decorating activities of the summer season the dark- 
ened and deserted Reichstag building in the Tier- 
garten spoke silently but eloquently of the passing 
of an era. In the square in front of it Bismarck and 
Moltke in bronze impassively gaze upon the rising 
of a new Reich, so different from the one they helped 
to buHd. 


But if, on the surface, Germany is not very differ- 
ent from what it was before the appearance of the 
Third Reich, the gradual transformation of social 
habits and the social structure is perhaps even more 
far-reaching than it is in Italy. Fascism and Na- 
tional Socialism, we know already, have been par- 
ticularly active in bringing people into their fold in 
ever-increasing numbers, an object so largely 
achieved through the activities of the Dopolavoro 
and the Kraft durch Freude, of the various youth 
organizations — the Balilla, Avangmrdisti and Hit- 
ler Jugend — and of the many other organizations 
controlled by the Fascist and the National Socialist 
Parties. The paternal hand of the Rome Govern- 
ment reaches forth to those Italians who live beyond 
the seas. In the summer of 1935 special camps and 
summer colonies were maintained for the children of 
Italian emigrants, who were brought back to the 
mother country from every comer of the world. 
These children received an enthusiastic and affec- 
tionate welcome such as they are not likely to for- 


get. The money spent by the Government in these 
days of deserted ocean liners and subsidized shipping 
was no tremendous sum, and the effect of this home- 
coming on the minds of tbe young expatriates will 
probably be a lasting one. 

Extremely important, I think, is another transfor- 
mation, that which old methods of carrying on social 
and relief work have undergone. Great pains have 
been taken, especially in Gerniiany, to make aid of 
this kind more personal and less coldly formal, even 
though the amounts distributed have not necessarily 
increased. The Fascist and the National Socialist 
Parties have taken over all existing relief and wel- 
fare organizations and set up a number of new ones. 
Through these agencies the local organs of the Par- 
ties carry on the work of their predecessors in the 
name of the respective Parties and often in the name 
of Mussolini and Hitler. It is strongly emphasized 
that relief is not a charity, but the right of the recipi- 
ent and, correspondingly, one of the duties of the 
community. The principle itself is, of course, by no 
means novel; it is the very basis of unemploy- 
ment insurance. The chief German agency for 
relief is the Volkswohlfahrt which existed in pre- 
Hitler days. It now has millions of members and 
has done excellent work. The Winter Belief {Winier- 
hilfe) is an innovation of the National Socialist 
regime. It brings its aid to the needy with the slo- 
gan “Fight Hunger and Cold.” The necessary funds 
are provided by widely advertised public campaigns 
accompanied by sales of lottery tickets, pamphlets, 


flowers, tags, medals and ribbons. Every flrst Sun- 
day during the winter months each German family 
is expected to eat just a single meal, consisting of 
only one course cooked in one pot. The cost per each 
member of the family must not be more than some 
very small specified sum. The difference in cost be- 
tween this frugal meal and the normal dinner is 
given to the fund for Winter Relief. The act is a “vol- 
untary” one, but it is something that everybody 
does. I have already quoted Hitler’s statement at 
the opening of the Winter Relief campaign of 1934 
in which he strongly emphasized the ideological and 
social importance of this method of letting those 
who have shared with those who have not. A spe- 
cial day is set aside every year for a drive for Winter 
Relief funds. It is known as the “Day of National 
Solidarity” {Tag der nationcden SoUdaritdt). In 
1934r-1935 the Winter Relief obtained 362 million 
marks and, in various ways, was able to help some 
13.5 million people. These commendable activities 
have aspects that are somewhat reminiscent of the 
methods of Tammany Hall, although I was assured 
by observers generally critical of National Socialism 
that political differences are not permitted to inter- 
fere with the relief of the needy. 

Highly significant, too, is the kind of rough and 
ready comradeship that is consistently cultivated in 
the Fascist and National Socialist organizations, 
without any interference, of course, with the princi- 
ples of discipline and hierarchy. The members of 
the Fascist Militia and of the National Socialist 


S. A. and S. S. are drawn from every level of society, 
but there are no social distinctions under either black 
shirt or brown, just as there are none under the uni- 
forms of army privates. In Rome during the impos- 
ing State funeral of Luigi Razza and his compan- 
ions who, in August of 1935, perished in an aero- 
plane accident on their way to East Africa, I 
watched the Fascist Militia which lined the streets 
along which the funeral procession moved. The 
militiamen were obviously a cross-section of today’s 
Italy. Many were unmistakably peasants and work- 
ers. But not a few came obviously from the bour- 
geois circles and some were wearing the monocle. It 
is the rule among the members of the same troop of 
the S. A. to address each other by the familiar “du” 
instead of the formal "sie.” On the several tours I 
took in the company of National Socialist officials 
our drivers, who were usually in the uniform of the 
S. A. or the S. S., invariably shared our meals, and 
not infrequently joined freely in our talk. As the 
social and economic structure of the two countries 
is stiU very much what it was before, such intimacy 
with “their betters” cannot but be pleasant and even 
flattering to men who are in more humble circum- 

In this respect, as in many others, National Social- 
ism has gone farther than Fascism. The classlessness 
of the Third Reich has found its practical expression 
in the Labor Service (Arbeitsdiemt). It began as a 
voluntary organization in connection with the relief 
of unemployment and, looked at in that way, it is 


not vastly different from the Civil Conservation 
Corps of the United States. But the Labor Service 
is much more than a relief measure. With every 
justification it may be regarded as the preliminary 
stage of military training. Above all, it is the em- 
bodiment of the principle laid down by Hitler on 
May 1, 1933, that it is the duty of every German to 
do •m fl.T ui fl.l work, at least for a short time. Service 
with the labor corps was made obligatory first for 
university undergraduates and then made a neces- 
sary requirement for men entering government em- 
ployment. Since October 1, 1935, it has been com- 
pulsory for all young Germans. The term of service 
is six months. A similar service exists for women, 
but so far it is on a voluntary basis. But for women, 
too, the Chancellor expressed his intention of some 
time making such work compulsory. The purpose 
of the Labor Service is to give practical training in 
“national solidarity,” accompanied by hard physical 
labor and a large dose of National Socialist ideology. 
The young men are doing non-competitive work, 
such as land improvement, the draining of marshes, 
highway construction and the like They are given 
a thorough preliminary military training, wear uni- 
forms, and live in camps and barracks under condi- 
tions of Spartan simplicity. I visited several of these 
camps in various parts of Germany in 1934 and 
1935, and I must admit that I was impressed by not 
only the truly German perfection of the organiza- 
tion, but also by the healthy and cheerful appear- 
ance of the young men themselves and the obvious 


pride they took in their hard physical labor. The 
Arbeitspflicht is very much in the foreground of the 
German picture today. At the great National Social- 
ist demonstration in Berlin’s Tempelhof on June 29, 
1935, the gray-green columns of the labor battalions, 
wearing their characteristic caps, and carrying shov- 
els instead of rifles, marched with the precision of 
the old Prussian regiments of the guards. They re- 
ceived a great ovation. 


Appeal to the emotions plays an important part in 
the technique of both Fascism and National Social- 
ism. Rome and Berlin each have their own Ministry 
of Propaganda. Count Ciano, Mussolini's son-in- 
law, presides over the one, and Dr. Goebbels over the 
other. The family relationship between the Italian 
Minister of Propaganda and the Duce has won for 
his department the nickname of the Ministry sui 
generis. While there is nothing these Ministries of 
Propaganda could teach the expert managers of po- 
litical campaigns in democratic countries, there is 
that aU-important distinction between the two cases 
that no counter-propaganda is permitted in either 
Italy or Germany. Fascism and National Socialism 
are assuming more and more the character of reli- 
gions. I have already discussed their theology. They 
have their prophets, their saints and their martyrs, 
their rites and their s3nnbols. The high priests and 
prophets of the new cults are, of course, Mussolini 


and Hitler. The effigies and pictures of the Duce 
and the Ftihrer, on foot, on horseback, in aeroplanes 
and on board ship, inspecting troops, receiving the 
first offerings of the new harvest, visiting farms, or 
kissing children are to be seen everywhere, and are 
displayed quite as prominently as the Blue Eagle 
used to be in the United States in the palmy imd 
now defunct days of the New Deal. Both the Fascist 
and the National Socialist Parties publish official 
synodics containing the names of men who have 
fallen for the cause. The central and local headquar- 
ters of both Parties often have memorial halls. On 
their walls, amidst banners of the various Party or- 
ganizations surrounding the bust or portrait of the 
Duce or the Fiihrer, may be seen tablets commemo- 
rating the heroes of the movement. The lictor’s rods 
or the swastika are, of course, to be seen every- 
where. That spirit of comradeship I have already 
mentioned is extended by the Fascists and the Na- 
tional Socialists to the men who had fallen in the 
struggle for the cause. During the funeral of Hazza 
and his companions in Rome I witnessed the per- 
formance of the “Fascist Rite,” The cortege halted 
in the Piazza dei Cinquecento. The Secretary of the 
Party stepped forward and, one by one, he called 
the dead by name. As each name rang out the assem- 
bled multitude answered as one man: “Presente.** 
It would be idle to deny that even to a complete 
unbeliever the ceremony was deeply moving. The 
same ritual was followed in Munich in November 
1935 when the remains of the sixteen who perished 


in the abortive Putsch of 1923 were solemnly trans- 
ferred to their new resting place in the centre of a 
new and imposing group of buildings that house the 
activities of the National Socialist Party. “The cere- 
mony was replete with tiiat symbolism so dear to 
the German heart,” wrote F. T. Birchall, the distin- 
guished correspondent of the New York Times, “and 
it was ejctremely impressive.” On this occasion the 
Fiihrer followed the same route he had taken twelve 
years ago, the route that had led his companions to 
their death and had ended for him in his trial and a 
prison term at Landsberg. Moreover, even as twelve 
years ago, the column was led by Julius Streicher, 
Hitler following as one of the rank and file. The 
symbolic pageantry of this and similar occasions has 
reached in Italy, and especially in Germany, a de- 
gree of perfection for which a parallel is hardly to 
be found in democratic countries. 

Fascist and National Socialist usages have gradu- 
ally worked their way into the routine business of 
life. The Roman salute is not very frequently seen 
in Italy, but the Hitler salute is for all Germans 
practically compulsory. Every oflScial and many pri- 
vate letters now end with the familiar “Heil Hitler!" 
The Hitler salute, as taught in the labor camps, the 
S.S. and the youth organizations, is really more 
Hian an ordinary greeting. It is quite a little cere- 
mony which requires the assumption of a rigid 
stance, heel clickings, the raising of the hand and 
then the enunciation of the sacred formula. I had a 
distinct feeling that the younger men took no small 


pleasure in the performance. It is difficult to see 
how they could lose the habit. 

What is even more important perhaps is that this 
Fascist and National Socialist romanticism extends 
likewise to ways of thinking. When one begins to 
consider current problems in terms of the Roman 
tradition or of the muddled ideology of National 
Socialism one may easily reach the most unexpected 
conclusions, especially when currents of free ideas 
and independent thought are completely shut off 
through a rigid control over the press. The Italian 
Fascists are bent on the complete and final extermi- 
nation of the dolce jar niente and dream of turning 
the Neapolitans and Sicilians into effective and re- 
lentless “producers.” With many other friends of 
Italy I sincerely hope that they will never succeed 
in this purpose. In Germany the “spiritual revolu- 
tion” went a great deal farther. On one occasion I 
visited the school for the leaders of the Labor Serv- 
ice, which occupies one of the wings of the palace 
at Potsdam. The officer who took me about ex- 
plained to me that under the “Marxist-Liberal” 
regime the building that today houses this school 
was once occupied by Isadora Duncan and her pu- 
pils. So unseemly a desecration of the temple has 
been piously obliterated by the National Socialists. 
They have resanctified the temple by turning it over 
to the Labor Service and have thus restored it to 
the traditions of Frederick the Great. The officer 
was most earnest about it. One of my German 
friends of long standing, who has recently been con- 


verted to the tenets of National Socialism, tried to 
persuade me that there was no compulsory military 
service in Germany today, and that service in the 
army was merely a moral duty. He admitted that 
the non-fulfillment of this duty was bound to have 
immediate and unpleasant consequences, but his 
answer was the startling argument that a man who 
was not doing his duty was not a worthy member 
of the community. Indeed he described this as a 
striking manifestation of Germany’s “spiritual revo- 
lution.” Such reasoning was particularly puzzling, 
because it came from a former Prussian oflBcer with 
a good practical knowledge of the world. On another 
occasion I had to listen to an involved argument in 
defense of the hereditary farm law. The indivisibil- 
ity of landed estates in pre-revolutionary Prussia, I 
was told, had rendered inestimable service to Ger- 
many. Under this arrangement the elder son became 
the squire, the second went into the army and be- 
came an officer, and the third was supposed to take 
holy orders. The hereditary farm law would benefit 
National Socialist Germany along the same lines. 
One son, whether the eldest or the youngest, would 
carry on the work on the farm, and the second would 
provide suitable material for the corps of non-com- 
missioned officers. What was to happen to the other 
sons remained somewhat uncertain. Surely they 
could not all be turned into minor dignitaries of the 
church! One more example. The owner of a large 
estate in Brandenburg gave me a very detailed expo- 
sition of his interpretation of the Weltanschauung. 


It was utterly impossible for me to’ agree with his 
ideas, but, considering that I had provoked the dis- 
cussion, I tried to find a way out by making what I 
thought was a conciliatory remark to the effect that 
the economic policies of National Socialism had 
many elements in common with those of the New 
Deal. My inspiration proved to be an unhappy one. 
Indeed, it provoked a real explosion, and I was told 
rather sharply that the two policies could in no sense 
be compared, for Hitler was a man who had both 
high ideals and a keen sense of reality, while the 
first of these elements was entirely lacking in the 
President of the United States. National Socialism, 
indeed, is living in a world of its own. The intellec- 
tual atmosphere of Fascist and National Socialist 
circles partakes of that of the barracks, the 
Y. M. C. A. and a religious revival meeting. The 
proportion of these ingredients varies from case to 
case. It depends to a certain extent on the most 
recent instructions from the Party, but chiefly on 
the person to whom one happens to be talking and 
also, perhaps, on the particular mood of that person 
at the time. Although found in both Italy and Ger- 
many, it is in Germany that it is particularly pro- 

If we turn to the probable evolution of Fascism 
and National Socialism — ^presuming, of course, that 
they will survive for a number of years — two im- 
portant elements must be kept in mind. The first 
is that each of the two movements has absorbed 
many men and women who were formerly in oppo- 


sition, including even Communists. The second, 
which is more significant, is that the Fascist and the 
National Socialist Parties have been for some time 
closed associations and that they take no new mem- 
bers except those who graduate from the youth or- 
ganizations. At the end of 1934 the Fascist Party 
had some 1,850,000 members. The membership of 
the National Socialist Party is larger, perhaps twice 
as large. The road into the Party is practically free 
and, indeed, almost inescapable for those young 
people who have received the proper schooling. Such 
recruits necessarily come largely from the lower 
levels of society, for in them of course are found 
the great mass of humanity. How the resultant and 
inevitable change in the social complexion of the 
membership of the Fascist and of the National So- 
cialist Parties will eventually affect their future 
course it is impossible to say at present. But I think 
that the outlook offers little ground for the rather 
common belief that Dr. Schacht and his friends are 
firmly in control of Germany’s destiny. This seems 
to be true today, but it is by no means impossible 
that the real Fascist and National Socialist revolu- 
tions are merely beginning. 


The population of Italy and Germany does not 
consist of either Fascists or National Socialists alone. 
Even Dr. Goebbels was willing to admit this when, 
commenting on the assertion that all Germans today 


are National Socialists, he remarked in June 1935 
that “we hope this is true, but we do not believe it is 
true.” The fate of the outspoken opponents of the 
two regimes is so well known that it hardly needs 
elaboration. Communists, Socialists, Liberals, all 
those who took an active part in the struggle against 
Fascism and National Socialism or were suspected 
of being hostile have been subjected to great bru- 
tality and indignities. Some lost their lives. Many 
more went to prison. Thousands went into the cow- 
fino on the Italian islands or into the German 
concentration camps, where their fate under the 
supervision of black-coated guards is of the bleakest. 
Tens of thousands fled the country, to swell the 
ranks of the army of political refugees, an army that 
has grown to alarming dimensions since the war 
of 1914-1918, which was fought by the Allies and 
the United States in the name of political freedom 
and democracy, was brought to a successful end. 
None of these facts is denied in either Italy or Ger- 
many, but they are usually dismissed with the re- 
mark that a revolution is a revolution. Tragic and 
deplorable as are these persecutions of men and 
women whose crime, in an overwhelming number of 
cases, consists merely in disagreeing with the 
opinions of the new rulers, ihey are nevertheless not 
the worse side of the picture. It is true that they 
are persecutions which have deprived Italy and Ger- 
many of many of their leaders in the fields of sci- 
ence, art, literature and public life. But of still 
greater consequence is the regime of complete sup- 


pression of any freedom of thought that has been 
rigidly enforced by Fascism and National Socialism. 
The press, literature, the universities and schools, 
indeed, all things that cannot grow in the absence of 
intellectual freedom have been submitted to the 
most ruthless regimentation. Italian and German 
universities today are like cenotaphs or empty 
mausoleums. The technical branches have suffered 
less, and the dismissal of some of their eminent pro- 
fessors was the chief loss. Good and even excellent 
work is still being done in medicine, mathematics, 
chemistry, engineering and other “non-political” 
sciences. But the position of the humanities is truly 
and deeply tragic. History, law, economics and 
philosophy have to be taught in the spirit of Fascism 
and National Socialism. Some professors still suc- 
ceed in defeating the strictness of regulations mak- 
ing use of this subterfuge or that, but their position 
is precarious, and it is all humiliating to the last 
degree. The atmosphere of the universities has also 
changed. Nothing is left of the traditional liberalism 
and earnest search for truth for which these ancient 
Italian and German seats of learning were so rightly 
famous throughout the centuries. Politics have in- 
vaded them. The bulletin boards of Italian and 
German univeraties are covered with propagandist 
posters, and in Germany the violently anti-Semitic 
publication Der Sturmer is frequently displayed in 
the place of honor. The old German student corpo- 
rations, with their quaint uniforms and, if you like, 
with their foolish traditions, had either to disband or 


to bow to the commands of the National Socialist 
Party. Service in the labor corps is a necessary 
qualification for an academic position, and member- 
ship in the S. A or S. S. is also a requirement which, 
if not official, is nevertheless unescapable. 

Even the appearance of the universities has 
changed. Everywhere are the lictor’s rods or the 
swastika, even on the seal of the Economics Seminar 
of the University of Berlin. There is gloom, fear and 
foreboding among the many who teach and have no 
sympathy wiih the Hitler movement. The Uni- 
versity of Berlin has long been in the habit of hon- 
oring its distinguished teachers by placing their 
busts in the hall of the main building. Some of 
them are gone now, and no one seems to know 
whether the disappearance of this bust or that can 
be traced to a need of cleaning or repair, or to the 
discovery by some zealous National Socialist inves- 
tigator that the views or the ancestry of the distin- 
guished scholar do not justify the honor under the 
new regime. 

The position of the press is, if possible, even more 
tragic. It has simply to write or print under orders, 
and even its selection of news, whether domestic or 
foreign, must pass scrutiny by the appropriate 
Italian or German officials. Little wonder that 
Italian and German papera are hopelessly dull, and 
that foreign papers are eagerly sought. Chauvinistic, 
narrow, and thoroughly objectionable newspapers 
ejost in every country, and some of them have a 



wide circulation and a great following. Not a few, 
indeed, may stand comparison with the newspapers 
of present-day Italy and Germany. But where ttiere 
is freedom of the press no one need read them unless 
he so chooses. In Fascist Italy and National So- 
cialist Germany the most fundamental and un- 
deniable right of every man — the right to think, 
say and write what he believes to be true — ^is com- 
pletely and relentlessly denied. The apostles of 
Fascism and National Socialism have not yet 
learned and probably will never learn the simple 
fact that we cannot arrive at absolute truth, and 
that the only road that leads in that direction is the 
road of conflicting and freely expressed opinion. But 
for such theories, of course, there is no room in an 
ideology that preaches faith, discipline and obedi- 


The attitude of the National Socialist Govern- 
ment toward the Church has attracted much atten- 
tion abroad, and has aroused a possibly general in- 
dignation. Mussolini had his own violent struggle 
with the Holy See. In his early days the Duce was 
not only furiously anti-clerical, but also anti-Chris- 
tian. The expulsion of the Pope from Rome was 
openly advocated by some Fascists in 1919. But 
times have changed. In 1929 the Roman question 
was brought to an end by the Lateran Treaty, and 


at the same time Italy and the Vatican put their 
signatures to a Concordat. A great deal of friction, 
however, developed when it was put into force and 
on more than one occasion the relations between the 
Pope and the Duce were strained almost to the 
breaking point. What caused the conflict was, sub- 
stantially, the same thing that produced similar 
trouble in Germany a few years later: the refusal of 
the totalitarian State to admit the Church’s right to 
control organizations of young people. The Italian 
dispute with the Vatican was brought to a compro- 
mise solution in the early autumn of 1931. The 
Catholic organizations of young people were per- 
mitted to continue, but their activities were so dras- 
tically curtailed that they no longer interfered with 
the supremacy of the State. These organizations 
were specifically enjoined from carrying on any 
sports or athletic activities. The Church question in 
Italy was somewhat less complex than in Germany 
because virtually all Italians are Roman Catholics, 
and the Catholic Church itself is a highly central- 
ized institution. In spite of its international char- 
acter the Vatican is under strong Italian influence 
and is united with the Italian State by close and 
numerous ties. All this, perhaps, played its part in 
smoothing out the conflict between the Duce and 
the Holy See. 

The religious problem in Germany is a great deal 
more involved owing to the variety of Germany’s 
religious denominations. Von Papen’s success, when 


in the name of the Hitler Government he was able 
to conclude a Concordat with Rome, was largely 
offset by the difficulty of carrying it into effect. The 
chief reason, as noted above, was the same as that 
in Italy, the refusal of the State to permit any or- 
ganizations of young people to be under the control 
of the Church. In Germany, moreover, there was a 
long series of conflicts between the State and the 
different religious denominations, which likewise 
grew out of the determination of the Hitler Govern- 
ment to prevent any interference from religious 
bodies in what it considered to be the rightful 
sphere of State activity. As to what constitutes the 
precise limits of this sphere, that is something which 
the Government, of course, reserves the right to de- 
termine for itself. More oil was thrown upon the 
fire by the extravagant attacks upon Christianity 
indulged in by some of the National leaders and 
their attempts to create a new religion based on the 
worship of Teutonic heroes. The conflict between 
Church and State led to the summary removal and 
to the arrest and prosecution of a number of dis- 
tinguished churchmen. I shall not attempt to re- 
view the various phases of this dark chapter in 
Germany’s history, which is still by no means closed. 
It will suffice to point out that, although freedom of 
faith is openly proclaimed by National Socialism, it 
is subjected in practice to treatment which is essen- 
tially the same as that meted out to all individual 
liberty in the totalitarian State. 



We have already seen that the Fascist doctrine of 
the Nation is not based on any concept of race and 
that therefore, fortunately for Italy, the teachings of 
Mussolini are free from anti-Semitism. No other 
phase of the German situation has so shocked the 
conscience of the world as has National Socialism’s 
militant and intolerant policy toward the Jews. 
Germans are constantly pointing to and stressing 
the fact that race discrimination and anti-Semitism 
are by no means German inventions. This is un- 
fortunately only too true. Discrimination against 
the Negroes in the United States, and the complete 
exclusion of Orientals from immigration by Act of 
Congress are familiar instances. They find their 
fitting counterparts in the legislation and practice of 
a number of countries. Anti-Semitism and social 
discrimination against the Jews are also unhappily 
far from being merely a product of National So- 
cialism. But there is a wide abyss between social 
discrimination and a policy that practically aims 
at the extermination of a whole section of the popu- 
lation, although it must be admitted that the un- 
written but absolute rule of at least one New York 
club which bars all Jews from membership offers 
food for sad reflection, especially since the club in 
question counts among its members representatives 
not only of the social but also of the intellectual 
elite of the country. These considerations in no way 


justify the National Socialist policy. Restrictions on 
immigration cannot properly be compared with the 
measures taken by the Hitler Government against 
the Jews. Many such restrictions may be criticized 
on good ground as unsound and objectionable. But 
the difference between the two cases is clear and 
striking. It is one thing to prevent foreign settlers 
from coming into the country; it is something very 
different practically to make outcasts of a whole 
group of one’s fellow citizens. 

Anti-Semitism was one of the first tenets of 
National Socialism. It was an article of the original 
program, and it is indoctrinated with extraordinary 
violence by Hitler in Mein Kampf. The National 
Socialist Government has practised it with sys- 
tematic and relentless persistence. Beginning on 
April 1, 1933, with the one-day boycott of shops and 
stores owned by the Jews, the persecution has gone 
steadily on. Under the so-called Nuremberg Law, 
enacted in September 1935, the Jew in Germany has 
been condemned to an all but absolute exclusion 
from every trade and profession and to a complete 
segregation as well. With a perverted logic and 
perseverance that is maniacal, National Socialism 
has likewise extended its restrictive and deadly 
edicts not only to Jews, but also to all persons hav- 
ing a specified percentage of Jewish blood in their 
veins. I shall not try to follow the Nuremberg legis- 
lators in their experiment in this sinister race al- 
chemy. The position of the Jews in Germany today 


is perfectly clear: it is wholly intolerable. To add 
to the legal restrictions, which were designed to pre- 
vent them from earning a living and which have 
largely succeeded in their purpose, Germany’s Jews 
are subject almost daily to violent attacks from the 
leading figures of National Socialism, among whom 
Goebbels, Streicher and Rosenberg have particu- 
larly distinguished themselves. It would serve no 
useful purpose if I cited instances of their gross and 
vulgar abuse which have been fully reported in the 
press. To make things worse, even emigration has 
been made difficult and extremely costly by stringent 
restrictions on the transfer abroad of German funds 
— though, for that matter, many of the Jews have 
nothing to transfer. 

A very puzzling aspect of the situation is that the 
persecution of the Jews continues relentlessly in 
spite of the fact that it is not popular with a sec- 
tion of even National Socialist opinion. I know per- 
sonally of a case where a firm engaged in a business 
from which Jews are definitely barred, continues to 
employ one of them. The head of the fiirm is a 
member of the Party and an S. S. man; practically 
his whole staff, with the exception of the Jewish em- 
ployee, are also members of various National So- 
cialist organizations. Discovery by the authorities 
of the presence of that forbidden employee would 
certainly have most serious consequences for the 
firm in question and especially for its head. He 
nevertheless takes the risk on the ground that he 


cannot throw into the street a man who has been in 
his employ for years and has shown himself to be 
a useful and a faithful co-worker. 

Even more puzzling, perhaps, is the attitude of 
some of Hitler’s warmest admirers who completely 
disagree with his anti-Jewish policies. By chance I 
met in Berlin a man I had known many years be- 
fore, under an entirely different sky. He is quiet, 
middle-aged, of good education, and has had a good 
deal of experience of the world. He surprised me by 
the statement that he had recently joined the S. A. 
And he surprised me even more when he spoke of 
Hitler as the greatest man not only in Germany but 
in the world. I asked about the Jewish question, 
which was much in the public mind at the time, as 
a result of violent anti-Jewish outbursts on Kur- 
furstendamm, outbursts, indeed, which had a distinct 
flavor of the old Russian pogroms. He said that the 
whole thing was perfectly disgusting, but that Hitler 
was in no way responsible for it. And he advanced 
the quite fantastic theory that the anti-Jewish 
policy was carried on lai^ely against the will of the 
Fuhrer by the high officials of the Party, who were 
under the influence of Baltic Germans from the 
former provinces of Russia. These Baltic Germans, 
among whom is Rosenberg, had brought with them 
to Germany their violent anti-Semitism; and it has 
been made even more violent as a result of the 
Soviet Revolution, which is usually interpreted in 
reactionary Russian circles as having been made pos- 


sible by the Jews. My natural question was whether 
he had read Mein Kampf. He said he had and it 
was a marvellous book, but that Hitler was never- 
theless not really opposed to the Jews. How the two 
things can go together is, for me, still a mystery. 
This conversation, however, took place before the 
passing of the Nuremberg laws. 

The anti-Jewish policy of National Socialism has 
harmed Germany more in the outside world than 
has any other measure of the Hitler Government. 
Everyone probably knows people who speak rather 
sympathetically of Mussolini, but bitterly denounce 
Hitler. And it is very common, especially among a 
certain type of so-called radicals, most violently to 
abuse both Mussolini and Hitler for their trampling 
down of all freedom and at the same time to praise 
highly the Soviet Union, although Moscow shows 
even less respect for the bourgeois principle of indi- 
vidual freedom than does Rome or Berlin. But in 
the persecution of people on the ground of race there 
is something that is particularly shocking. It seems 
to be a distinct return to the darkest days of the 
Middle Ages; and coming as it does from a country 
of Germany’s cultural standing and traditions it is 
something to which one finds it impossible to be- 
come reconciled. 

The very worst feature of this unhappy situation 
is that there is, apparently, no way out. Anti- 
Semitism permeates the entire structure of Ger- 
many to such an extent that it is hopeless to expect 



that it can be abandoned. Assuming that National 
Socialism will continue to maintain its power, the 
only solution of the Jewish question one can sug- 
gest is that, by degrees, Germany’s Jews may drift 
away to other countries. But this is hardly any solu- 
tion at all. 


The position of the ordinary citizen in the totali- 
tarian State is not exactly an easy one. If he is for- 
tunate enough to be carried away by the eloquence 
of its leaders and to come to believe in the prin- 
ciples of Fascism and National Socialism, he may 
derive no small satisfaction from participating in 
the manifold activities of the State and of the 
Party. But if he cannot let himself be so carried 
away he finds himself in the position of a hostage 
in an enemy camp. Theory and practice in the case 
of both Fascism and National Socialism find them- 
selves in hopeless contradiction. The theory speaks 
of free and voluntary cooperation for the great com- 
mon purpose, of the supremacy of the interests of 
the Nation over the interests of the individual. In 
practice, however, these high-sounding phrases are 
reduced to the code of the ruthless martinet, com- 
plete distrust of everyone who does not belong to 
the chosen few, and oligarchical rule by a self- 
appointed elite. There is no freedom of opinion, no 
freedom of the press, no recognized opposition. It 


is probably true that both Italy and Germany have 
succeeded in achieving a considerable degree of na- 
tional unity. But the sacrifices they have had to 
make in the process have assuredly been heavy. 

The two regimes, moreover, give one the peculiar 
feeling that they are alike strong, and at the same 
time fragile. Their strength resides in the fact that 
they have succeeded in enrolling so many people 
under their banners and in identifying themselves 
with the routine of life and immediate interests of 
a very large number of their followers. Their chief 
weakness, as forms of government, consists not only 
in the danger inherent in all political suppression, 
which is bound to breed discontent, but also in the 
fact that they are eminently personal regimes. Fas- 
cism is*identified with Mussolini and National So- 
cialism with Hitler. It is difficult to imagine what 
will happen when the leaders are gone. Personal 
dictatorship necessarily makes it difficult to pre- 
pare a successor, lest in the end he become a rival. 
That process of selection which is possible in a 
democracy is totally lacking under Fascism and 
National Socialism. On the other hand, it must be 
remembered that Lenin likewise towered high above 
his followers, but that nevertheless at his death he 
was succeeded by Stalin who, little known as he was 
at the time, has been at the helm ever since. Gov- 
ernment by a dictatorial Party organization may 
acquire such strength that its self-perpetuation may 
become a practical necessity. 


It has often been said that the democratic form 
of government is the best, but also the most diffi- 
cult. After surveying the ways of the totalitarian 
States one feels more convinced than ever that the 
effort to overcome the difficulties is distinctly worth 




There is much in the teachings and methods of 
Mussolini and Hitler to justify the general foreboding 
with which Fascist Italy and National Socialist Ger- 
many are viewed abroad. The Italian invasion of 
Ethiopia could not but strengthen the widely-held 
opinion that Fascism and National Socialism neces- 
sarily mean war. However, there are involved certain 
broader issues which cannot and should not be dis- 

The Italian campaign in Abyssinia has brought 
into the foreground of public discussion a question 
that has long been worrying the more thoughtful 
observers of international affairs — the question of 
territorial expansion. The whole complicated ma- 
chinery for the collective maintenance of peace, 
which since the end of the war has been built up 
around the League of Nations and which has been 
supplemented by innumerable non-aggression pacts, 
would seem to be constructed on the assumption 
that the world will continue for all time to come 
without any changes in its present territorial fron- 
tiers. The only article of the Covenant that may be 
interpreted as affording an opportunity for changes 




is the loosely worded Article 19, which refers to the 
possibility of revising existing treaties and to “the 
consideration of international conditions whose con- 
tinuance might endanger the peace of the world.” 
Few, however, have ever suggested that Article 19 
provides an escape from the impasse, and that its ap- 
plication would be likely to result in any substantial 
redrafting of the map of the world. This situation 
creates a feeling of extreme uneasiness and not infre- 
quently gives the impression that the more one talks 
of peace the more one thinks of war. This feeling of 
uneasiness is further strengthened if one takes aglance 
at a map and compares the relative position of the 
various Powers. It has often been said that the 
nations of the world may be broadly divided into 
two groups: those “who have” and those “who have 
not.” This refers, of course, to the size of any na- 
tional territory as compared with its population, and 
also to the supply of essential raw materials. Of 
.the first group, the United States, Great Britain, 
France and the Soviet Union are the best examples; 
of the second, Italy, Germany and Japan. Far less 
enthusiasm for the existing machinery for the main- 
tenance of peace has been shown by the nations 
“who have not” than by the nations “who have.” 
Japan has been expanding with impunity in Man- 
churia and China. Italy, at the time of writing, is 
fighting her way through the mountain wastes of 
Abyssinia with practically all other countries aligned 
against her. The eyes of the world are turned with 
deep anxiety and apprehension toward a Germany 

254 FASCISM Ain) national socialism 

that is straining every nerve in a determined effort 
to build up a powerful war machine. 

There are many who believe that the chief cause 
of the present international complications and in- 
ternational tension is the existence in certain coun- 
tries of government by a dictator. “We have a new 
factor in Europe,” declared Mr. Stanley Baldwin at 
Bournemouth on October 4, 1935. “We have dic- 
tatorships and we know that historically, however 
pacifist early stages of such forms of government 
may be in their intentions, a tendency has shown 
itself later to divert attention from domestic difSi- 
culties to external adventures.” From this Mr. Bald- 
win drew a conclusion that could not but be pleasing 
to his audience— he was addressing a conference of 
the Conservative Party — ^namely, that Great Britain 
would have to increase her armaments in order to be 
in a position to fulfill her obligations under the 
Covenant of the League of Nations. The comments 
of the British press and the results of the general 
election of November 1935 would seem to indicate 
that Mr. Baldwin has the country solidly behind 

Nevertheless, his explanation of Mussolini’s East 
African venture — for, pr^umably, the Duce was one 
of the dictators Mr. Baldwin had in mind — can 
hardly be accepted as adequate and complete, al- 
though it contains an important element of truth. 
The patent weakness of Mr. Baldwin’s argument is 
the omission of any reference to the great national 
problem of overpopulation and expansion, which the 



East African expedition is attempting to solve in a 
manner that may be entirely wrong. It would hardly 
be correct to assume that Mussolini was driven into 
his colonial venture by domestic difficulties. I have 
made it clear that Italy, like many other countries, 
was in 1934-1935 experiencing serious economic 
troubles. But it is not easy to see how these difiScul- 
ties could be relieved by a colonial expedition which, 
even in the case of complete and speedy military 
success, would prove an immense financial burden 
and, for many years to come, would involve large 
outlays for the development of the newly acquired 
territory. An undertaking of this nature can hardly 
be described as an attempt “to divert attention from 
domestic difficulties to external adventures.” It 
must also be borne in mind that as a consequence of 
their veiy low standards of living the masses of the 
Italian people are not quite so susceptible to the 
effects of the depression as are those of countries with 
higher standards. Moreover, the Italians endure 
economic privation with seemingly inexhaustible 


The chief elements of the situation have been out- 
lined in earlier chapters. We already know that 
Italy has a territory which only at a considerable 
sacrifice can produce sufficient foodstuffs to feed a 
prolific and rapidly increasing population; that she 
depends almost entirely on imports for her supplies 


of raw materials; that the standards of living of her 
people are appallingly low. And we also know that 
Italy is now under a dictatorship which, through an 
elaborate network of Party agencies and a state- 
controlled press, has practically unlimited oppor- 
tunities for influencing public opinion. 

It must be remembered that the economic difiS- 
culties of Italy have been greatly intensified in the 
course of the last years. The shrinkage of “invisible” 
exports and international trade, aggravated by the 
overvaluation of the lira and the depreciation of the 
pound sterling and the dollar, has been a formidable 
obstacle to Italy’s obtaining the foreign exchange 
necessary for the purchase of raw materials which, 
to repeat, are vital to her industry. Emigration, 
which used to be a safety-valve for Italian surplus 
population, has been practically cut off since the 
beginning of the depression. The 200,000 Italians or 
more who used to find seasonal work in France, Ger- 
many, Belgium and Switzerland have been forced by 
immigration restrictions to remain in idleness within 
the national frontiers. No reasonable person could 
blame other European nations or overseas countries, 
which are wrestling with their own problems of wide 
domestic unemployment, for closing their frontiers 
to Italian labor. But this is cold comfort to the 
Italians who are brought face to face with the in- 
escapable fact that a country like theirs, which is 
not in a position to provide a decent living for its 
own people is, even more than other countries, at 
the mercy of uncontrollable economic forces, to say 



nothing of international political emergencies. The 
plight of Italy has not passed unnoticed. “We have 
always understood and well understand Italy’s de- 
sire for overseas expansion ...” said Sir Samuel 
Hoare in the House of Commons on July 11, 1935. 
“Let no one therefore in Italy . . . suggest that we 
are unsympathetic to Italian aspirations.” But he 
added, of course, that the legitimacy of Italy’s desire 
for expansion was in no way a sufficient reason for 
her plunging into war. 

The undoubted fact of Italy’s need for expansion 
does not in itself explain the present East African 
expedition. Italian peasants and workers naturally 
know as much about Abyssinia as do people in other 
countries, that is, practically nothing; the idea 
of embarking on the conquest of the realm of the 
King of Kings could never have occurred to them. 
This is where the responsibility of the Fascist Gov- 
ernment begins. I have quoted, in my discussion of 
Fascist doctrine, excerpts from Mussolini’s writings 
which glorify war and heroism. It is in the deserts 
of Abyssinia and under the tropical sun of East 
Africa that this creed is to receive its acid test. Some 
25 years ago Mussolini was one of the most out- 
spoken critics of the Libyan expedition and one of 
the leading “anti-Africanists.” Since then, he has 
changed his mind on this subject, as he has on so 
many others. There may be danger in thinking and 
talking too much of the glory of ancient Rome. The 
imperial dream of the Duce is written in stone on 
the walls of the v^erable Basilica of Maxentius 


whose noble ruins stand on the Via dell’Impero, in 
the very heart of the Roma Mussoliniana. His ap- 
peal to the imagination of the Italians took the form 
of four maps. The first represents Rome in the 
eighth century b.c., when it was merely a city; then 
comes the Rome of 146 b.c., after the Punic Wars, 
and third, the Roman Empire of 14 a.d., at the time 
of the death of Augustus. The fourth and last map 
depicts the Empire under Trajan, in 96-114 a.d. The 
territories then under Roman rule did not merely 
encircle the Mediterranean. They also comprised 
large portions of further Europe, including all of 
Spain and a good part of the British Isles and ex- 
tended eastward to the Black Sea, the Caspian Sea 
and the Arabian Gulf. The difference between the 
first map and the last is striking indeed. What 
was the purpose of this object lesson in ancient 

In the late summer of 1935 no visitor to Italy who 
was not completely cut off from local opinion could 
possibly doubt that the Fascist Government was 
finally and irrevocably committed to the East Afri- 
can venture. From discussions of the subject I had 
with a large number of Italians drawn from every 
class of society and every walk in life, from mem- 
bers of the cabinet to hotel servants and peasants, 
it was made abundantly clear to me that there was 
little feeling of enmity or ancient grudge against 
Abyssinia herself. The whole expedition was held 
to constitute a war of necessity: Italy was fighting 
for her place in the sun. It was not imagined, of 



course, in responsible circles that the conquest of 
Abyssinia would solve all Italy’s difficulties. But it 
was believed that a new East African colony would 
provide large tracts of fertile and still unoccupied 
land on the upper plateau, where climatic conditions 
were reported to be suitable for white colonization. 
This opinion was fully corroborated by a recent and 
authoritative publication of the British Royal In- 
stitute of International Affairs. The future settlers 
were visualized as small farmers who would be able 
to produce enough for their own needs and for the 
needs of the mother country without trying to en- 
gage in competitive wheat exporting for the inter- 
national market. In keeping with that romanticism 
which is characteristic of every movement of the 
Fascist Government the colonists were first to con- 
quer the land in the best tradition of the Roman 
legions, and then settle down on it under the protec- 
tion of the Italian flag and the lictor’s rods. It was 
also believed that Abyssinia would be able to pro- 
duce at least two commodities that count heavily 
today among Italy’s imports: cotton and coffee. 
There were rumors, too, that Abyssinia contained 
much mineral wealth and large deposits of oil, but 
in responsible circles these reports were heavily dis- 

From the very beginning the soundness of the 
East African venture was open to considerable 
doubt, even leaving aside the probability of inter- 
national complications, which have since material- 
ized to an extent no one could possibly have foreseen 


in the summer of 1935. The large-scale colonization 
of an African territory by Europeans presented a 
novel and difficult problem. It would be extremely 
costly and, until many years had passed, could not 
possibly make any return on the large investment 
demanded. Even in one who knows nothing about 
colonial warfare, the mere vastness of Abyssinia and 
the reported difficulties of terrain and climate in- 
spire the gravest apprehension. The Italians seemed 
to have a boundless confidence in their air force and 
the use of the most modern methods of warfare. I 
was told, indeed, that never before in colonial his- 
tory had an expedition been undertaken with so 
large and well-equipped a force. But one naturally 
feels that these very elements of novelty might well 
contain the elements of danger. To a member of the 
Mussolini cabinet, who was good enough to grant 
me an interview, I stated very frankly the doubts in 
my mind concerning the economic and technical 
aspects of the East African expedition. He listened 
to my argument with the greatest courtesy and 
serenity and then asked me if I could offer Italy 
anything better than Abyssinia. The Fascist posi- 
tion was made perfectly clear: Italy needed expan- 
sion, and East Africa was the only possible outlet. 
I was also assured from a very high source that the 
purely military part of the Abyssinian campaign 
would be over before the end of the year. At the 
time of writing, in December, this all-important part 
of the program does not seem likely to be fulfilled. 

Doubts and apprehensions such as I have ex- 



pressed have naturally occurred to many Italians, but 
they have not been permitted to reach the masses. 
A most intensive campaign of propaganda in favor 
of the East African war has been relentlessly carried 
on, by both press and Fascist organizations. No 
nation is immune from the war psychosis, and the 
Latin temperament is perhaps particularly suscep- 
tible to it. The result has been that public opinion 
has become the victim of the most extraordinary 
delusions. The most striking, perhaps, was the view 
generally accepted in Italy in the summer of 1935 
that Great Britain was a decadent nation, and that 
the British fleet was entirely at the mercy of the 
Italian air force. The irrefutable evidence of British 
decadence, offered virtually dozens of times, was the 
perfectly innocuous, if rather widely advertised reso- 
lution of the Oxford Union in which the undergrad- 
uates of England’s ancient university proclaimed 
their decision not to fight for Bang and Country. It 
was argued in Rome from this and similar premises 
that when it came to a choice between Italy and 
England, France in her quest for European security 
was bound to side with the former. The develop- 
ments at Geneva and the imposition of sanctions by 
the League must have caused a rude awakening. 

But the great propaganda effort made possible by 
the Fascist Party’s absolute control over the country 
has borne fruit. The war in East Africa, which h^ 
its immediate origin in the decision of the Duce, has 
grown into a national problem. The great masses of 
Italians were led to believe ihat practically their 


very existence as a nation, as well as the safe- 
guarding of national honor, depended on the success- 
ful issue of the campaign. Up to the beginning of 
September, I think, there was no real enthusiasm 
for the war except among the young, but there was a 
real determination to back the Government and see 
the thing through. Judging by newspaper reports 
the international repercussions of the East African 
adventure have not weakened this feeling, but have 
made it even stronger. There must be dissenting 
voices, but they are not heard. 


On the eve of M. Laval’s departure for Geneva 
early in September 1935, there was a great deal of 
uneasiness in French political circles over the Ethi- 
opian situation. The Paris Temps, which always re- 
flects the opinions of the Quai d’Orsay, said on that 
occasion that the task of the French Prime Minister 
consisted in maintaining Franco-British cooperation, 
safeguarding Franco-Italian friendship, and solving 
the Ethiopian problem without damaging the 
authority of the League of Nations. It will be 
agreed that this was a rather formidable assign- 
ment. A student who approaches the international 
phase of the Ethiopian conflict with a desire to be 
objective finds himself, like M. Laval, in an unfor- 
tunate position. It is impossible to feel anything 
but the deepest sympathy for Ethiopia, who is very 
much in the position of the whipping boy, except 



that that unhappy nation not only gets the thrash- 
ing but also faces the menace of wholesale swallow- 
ing by Italy. The Ethiopian delegate, Tecle Hawar- 
jate, made an extremely moving appeal before the 
Council of the League when he stated tliat tiie first 
taste of European civilization his countrymen were 
getting was their contact with Italy’s powerful war 
machine, and that they were being exterminated by 
modern instruments of warfare the very existence 
of which they never suspected. This is unfortunately 
only too true, although it is also true, as it is argued 
on the Italian side, that the Ethiopian Government 
has decided limitations, and that the method of 
bringing civilization to the natives, so rightly de- 
plored by the Ethiopian delegate, is by no means 
peculiar to Italy. This is indeed the way in which 
civilization, under the protection of various national 
flags, was introduced to not a few of the so-called 
backward nations in other parts of Africa and, for 
that matter, all over the world. The familiar euphe- 
mism — ^the “white man’s burden” — ^has a very real 
counterpart in the “colored man’s burden.” 

But all the sympathy should not go to Ethiopia 
alone. I have already discussed Italy’s need for 
territorial expansion the legitimacy of which, to re- 
peat, was acknowledged by Sir Samuel Hoare. And 
one cannot disregard the fact that by September and 
October 1935 the East African expedition was no 
longer Mussolini’s private war, but in the full sense 
of the term a great national enterprise for the suc- 
cess of which millions of Italians were prepared to 


make the supreme sacrifice of their lives. Tlie Coun- 
cil of the League of Nations had to consider not 
only the factors directly involved in the Italo-Elhi- 
opian dispute but, above all, the probable repercus- 
sions of its own decision upon the existing structure 
of collective security and the general course of world 
politics. There are good reasons for believing that 
it is the latter considerations that have played an 
exceptionally large part in framing the Council’s 
policies. So the Council of the League also deserves 
sympathy in its ungrateful task. 

I need not go into the details of the Geneva pro- 
cedure for they are not essential to my purpose. 
The gist of the Italian argument at Geneva, which, 
I think, voiced something that is very different from 
the real causes of the conflict — ^was that Abyssinia 
was a barbaric country unable and unwilling to 
maintain its treaty obligations, and that Italy’s 
action was taken in defense of her East African 
colonies. The chief argument of the League against 
Italy was that Italy had failed to live up to her 
obligations as a member, and had broken her pledge 
not to go to war. On October 7, 1935, the Council 
of the League named Italy as the aggressor and later 
voted economic sanctions, which were put into effect 
on November 18. At the present writing the iron 
ring of economic blockade is closing more and more 
tightly about her. 

This unprecedented action of the League raises a 
number of perplexing and bewildering problems. 
One may well be permitted to question whether the 



imposition of sanctions against Italy is a step toward 
the maintenance of peace or, rather, a likely source 
of further and worse international complications. If 
my analysis of the character of Italy’s East African 
venture is correct, and the three important elements 
in the situation are (1) the need for expansion, (2) 
the nature of Mussolini’s action, and (3) the state 
of public opinion in Italy, it will appear that the 
sanctions deal only with the second point. They are 
meant as a penalty for the wrongdoing of the Italian 
Government and are to serve as a deterrent to other 
countries. This procedure might have been of some 
use if the League had been in a position to offer a solu- 
tion for the other two points. The application of sanc- 
tions, needless to say, is no move toward meeting 
Italy’s need for colonial expansion. If anything, it is 
very likely to intensify her desire for more territory 
by emphasizing the vulnerability of her present posi- 
tion. The effect of the Geneva decision, judging by 
press reports, has so far been to unite the country be- 
hind the Duce. Italy refuses to accept the verdict of 
Geneva, just as Germany refused to accept the ver- 
dict of Article 231 of the Treaty of Versailles. It is 
greatly to be feared that the ultimate results may 
not be altogether different. 

The sanctity of treaties is, no doubt, the very 
foundation of the existing international order. But 
it is the contention of the Italians that they have 
not really violated the spirit of their obligations, be- 
cause Abyssinia was not a worthy member of the 
League. This, however, is obviously a question for 


the League and not for Italy to decide. On the other 
hand, the non-fulfillment of agreements solemnly en- 
tered into is not confined to It-aly. The recent rec- 
ords of practically every country that voted against 
Italy at Geneva — and also of those that are not 
represented in the League of Nations — ^have not 
been blameless in this respect. In many instances 
failure to live up to national promises is, of course, 
very different from the case of Italy now in ques- 
tion. Some of these breaches of contract had excel- 
lent justification. Two wrongs assuredly do not make 
one right, but in the absence of a rigid code 
of international ethics the decision as to when the 
repudiation of an obligation is permissible and when 
it is not is necessarily left to somewhat arbitrary 
interpretation. And interpretation varies within 
an extraordinarily wide range, from capital to capi- 
tal, from year to year, and even from month to 

In early December 1935 the military effects of the 
sanctions were still highly uncertain. They have 
undoubtedly added greatly to Italy’s difficulties. 
But so far they have failed to stop the war, and it is 
by no means obvious that they will not actually pro- 
long it. The economic consequences are much 
clearer. They will bring infinite misery to the hard- 
working and sadly tried Italians. The already hum- 
ble incomes of peasants and workers will be further 
cut down and their frugal meals will be made even 
more frugal. Between the apostles of national soli- 
darity and Roman tradition, on the one hand, and 



the champions of international morality, on the 
other, their fate is dark indeed. Other nations will 
be affected in a similar way, although in lesser de- 
gree. The prohibition of trade with Italy will neces- 
sarily bring in its wake increased unemployment in 
exporting countries, and wiD further hamper in- 
ternational trade, on the expansion of which so 
many of us have believed the recovery of the world 
largely depends. It will also undoubtedly intensify 
that desire for economic self-suflBciency that has 
been one of the curses of the world, especially since 
the war. For the international scene is subject to 
rapid and dramatic changes. Only a few short 
months ago Mussolini was considered by many dis- 
tinguished minds on both sides of the Atlantic to 
be one of Europe’s greatest statesmen and a real 
friend of peace, his own eulogies of war notwith- 
standing. This evanescence of international reputa- 
tions has been dramatically brought to the attention 
of the members of the League by the personal trag- 
edy of the Italian delegate, Baron Aloisi. A year 
ago, and as late as the spring of 1935, he was one 
of the League’s most outstanding figures. It was 
“Baron Aloisi’s Committee” that handled for the 
Council the thorny Saar question. The most extrav- 
agant praise was showered in those days upon the 
distinguished Italian delegate. In the autumn of 
1935 Baron Aloisi fought a losing battle in the de- 
fense of his country’s case at Geneva. He spoke 
amidst icy silence and left the tribune without a 
single handclap. Who can say whose turn will come 


next? The inevitable conclusion would seem to be 
that one must be prepared for the worst. 

These and similar considerations could not have 
been ignored by the members of the League’s Coun- 
cil and Assembly. They reached their decision 
against Italy with heavy hearts and in full recogni- 
tion of the fact that every country will have to carry 
its share of the burden. But while their earnestness 
cannot be questioned, the wisdom of the decision 
itself is open to doubt. If one could at least be sure 
that the privations resulting from the application of 
the sanctions will really serve the ultimate cause of 
peace and international morality! The latter, how- 
ever, as I have already pointed out, is open to in- 
numerable interpretations. And, in the last analysis, 
the maintenance of peace is not so much a question 
of the perfection of written agreements and the 
number of signatures attached to them, as of the 
sincere desire of the nations to live up to the spirit 
of these agreements. Italy believes, rightly or 
wrongly, that she has been the victim of the most 
odious form of discrimination by the League. In the 
best Roman tradition the events of the fateful day 
of November 18, when the sanctions were put into 
effect, have been made a part of the ofiBicial record 
of the Eternal City through the unveiling of an 
appropriately inscribed marble tablet. The Italians 
are not likely to forget that date for many years to 
come, just as the Germans have not forgotten the 
Versailles Diktat. “It is difficult to give an adequate 
idea of the fierce, burning resentment Italians feel 



against the sanctionist countries ...” writes the 
Rome correspondent of the ATciy York Times, Arnaldo 
Cortcsi. “Apparently staid, well-balanced men 
fairly froth at the mouth when they speak of Italy’s 
allies in the World War. They feel that they are 
the victims of the greatest injustice that has been 
done since the beginning of the world, and they hate 
the perpetrators of it.” There is also in every coun- 
try, especially in France, strong opposition to the 
enforcement of the sanctions. This opposition is 
bound to grow stronger as the pinch due to their 
enforcement is felt more and more. The resulting 
situation cannot but be fraught with the gravest risk 
of social unrest, and it augurs ill for that spirit of 
good will and desire for international cooperation 
that is the only real safeguard of international 

The chief weakness of the steps taken at Geneva 
is perhaps the fact that they are concerned merely 
with the desire “to stop the war,” and contain no 
provision whatsoever for correcting the situation 
that brought about the conflict. This may be inher- 
ent in the very nature of the League, which must 
proceed in accordance with the provisions of its 
Covenant. The basic problems, however, were 
brought to the attention of the League’s Assembly 
on September 11, 1935, in a notable speech by Sir 
Samuel Hoare. The British Secretary for Foreign 
Affairs discussed the qu^tion of raw materials and 
recognized its importance, though he expressed the 
opinion that the significance attached by many gov- 


emments to the political control of sources of raw 
materials appeared to him exaggerated. “The view 
of His Majesty’s Government,” said Sir Samuel, “is 
that the problem is economic rather than political 
and territorial. It is the fear of monopoly — of the 
withholding of essential colonial raw materials that 
is causing alarm.” He suggested the holding of an 
inquiry to study the question, and proposed that 
“the emphasis in the terms of reference should fall 
upon the free distribution of such raw materials 
among the industrial countries which require them, 
so that all fear of exclusion or monopoly may be 
removed once and for all.” He added that “such an 
inquiry needs calm and dispassionate consideration, 
and calm and dispassionate consideration is impos- 
sible in an atmosphere of war and threatenings of 
war.” The fact that the Government of Great Brit- 
ain expressed its willingness to participate in such 
an inquiry was certainly a significant and novel de- 
parture which may prove to be the first step in the 
right direction. By a great part of the French and 
English press Sir Samuel’s speech was acclaimed as 
a model of lucidity and as representing a new factor 
of immense importance in international affairs. 

The reason for this enthusiastic reception has al- 
ways been to me something of a mystery, especially 
since Sir Samuel himself admitted that his impres- 
sion is that “there is no question in present circum- 
stances of any colony withholding its raw materials 
from any prospective purchaser. On the contrary, 
the trouble is that they cannot be sold at remuneror 



tive prices.*’ This last statement of Sir Samuel 
gives a very accurate description of the situation. 
The real problem is not that of monopolies of raw 
materials, but of the inability of the nations in need 
of these materials to pay for them. We have seen 
that precisely this inability is one of Germany’s 
greatest troubles and was one of the greatest trou- 
bles of Italy before the application of the sanctions. 
It will come up again the moment the sanctions are 
removed. The consideration of national safety in 
time of war also should not be overlooked. But 
if this is the situation, what is the meaning of the 
proposal of the British Government? In its 
present form it means hardly anything, and one 
may only hope that if and when the proposed 
inquiry is made it may be transferred from the 
purely illusory ground assigned to it by Sir Samuel 
to a more concrete and practical one, that of the 
redistribution of colonial mandates among those 
Powers who feel that the limited area of their na- 
tional territory is a real bar to their progress and 


Italy is, of course, not the only country in this 
position. Although Germany did not participate in 
the Geneva discussion of the Ethiopian crisis she 
was certainly present in the minds of the delegates. 
It needs no special political acumen or profound 
knowledge of the European situation to perceive 


that, but for her deep concern over recent develop- 
ments in Germany, the attitude of France toward 
sanctions would have been even more lukewarm, 
and her cooperation with Great Britain less enthusi- 
astic than it proved to be in the autumn of 1935. 
The French press leaves no possible doubt that the 
Ethiopian crisis in itself is regarded as a very sec- 
ondary matter, and that what really counts is the 
preservation of the existing machinery of insurance 
treaties and collective arrangements for the main- 
tenance of peace, so that it may be used against 
Germany in case France finds herself in conflict with 
her eastern neighbor. 

The question that naturally arises is whether 
France is justified in her fears of aggression on the 
part of Germany. 

Many of the aspects of the National Socialist 
Government are anything but reassuring. It will be 
remembered that Hitler, no less than Mussolini, is a 
firm believer in war as the supreme law of human- 
ity. The whole organization of the National Social- 
ist Party and of the National Socialist State, even 
more than that of Fascist Italy, is imbued with the 
martial spirit. Men and women, half-grown boys 
and girls, and mere children spend much of their 
time in military exercises or on the drilling ground. 
There are uniforms and marching columns every- 
where. A decree of the Chancellor in November 
1935 declared that practically the entire population 
must be held to be members of the Nation’s military 
forces and liable to call to the service at any timp . Tn 



March 1935 Hitler officially repudiated the disarmar 
ment clauses of the Versailles Treaty. This action, 
however, w'as not without justification. The summer 
of 1935 saw much bitter criticism in the French 
press of Britain’s insistence upon the application of 
sanctions against Italy since England did not con> 
sider such action against Germany after her repudia- 
tion of the disarmament provisions.^ Replying to 
this criticism the London Times, which on several 
occasions has spoken of the Hitler Government in 
terms of unusual severity, said editorially on August 
29: “They [the French] must remember that in the 
matter of rearmament Germany at least waited very 
patiently for ten years while the League tried to 
solve the problem. The right of equality had long 
been acknowledged, in principle; and only after 
many years had passed without its concession in 
practice did Germany take the matter into her own 
hands in violation of the treaty, of which, in that 
respect, she had never admitted the validity.’’ The 
position of Germany as the only great Power with 
limitations upon her armaments in the midst of na- 
tions that continued to strengthen their own armed 
forces was an obvious anomaly. It was a situation 
that was not meant even by the Treaty of Versailles 
to be made permanent. Its disappearance, I think, 
should be welcome because this inequality was one 
of the sources of the most extreme and aggr^sive 
form of German nationalism. 

*Thi 3 Franco-British controversy regarding obligations im- 
posed by international agreements is a good example of the 
extreme latitude in interpretation to which 1 have rdeired. 


But even if this is admitted — and I am aware that 
there are many who will here disagree with me — the 
fact nevertheless remains that some of the doc- 
trines, and especially the methods and the spirit of 
the National Socialist movement, cannot but create 
a feeling of great uneasiness and apprehension. 
Hitler has spoken much of peace in the course of the 
last months. His relations with Poland have been 
greatly improved. The Chancellor has declared that 
after the return of the Saar to Germany there were 
no more territorial questions between Germany and 
Prance. Peace, indeed, has been the ke3mote of oflS- 
cial German pronouncement for the last two years. 
I was surprised to find how little interest the minor 
officials of the National Socialist Party took in inter- 
national problems, including those of German/s 
"bleeding borders.” Unfortunately public opinion in 
Germany, probably to an even more marked degree 
than in Fascist Italy, is susceptible to sudden and 
complete revisal under the pressure of Party organi- 
zations and the controlled press. We have seen how 
the inherently peace-loving and easy-going Italians 
have been brought to the highest pitch of milita- 
ristic exaltation, and this for a cause which in itself 
could hardly make any broad appeal. The experi- 
ence is instructive and the possibility of its repeti- 
tion in Germany is by no means excluded. 

In the case of Germany, however, just as in that 
of Italy, the element of potential danger to peace is 
not due merely to the character and methods of the 
present Government. There is also the fundamental 



and inescapable fact that Germany has need of raw 
materials and of freedom to expand. While, at the 
end of the war, Italy at least added to her territory 
in Europe, Germany at the same time lost not only 
her colonial empire but also large sections of her 
homeland. Hitler, in Mein Kampf, is very critical 
of colonial expansion. He goes so far as to advocate 
the complete abandonment of colonial ambitions 
and even of the navy, this with a view to obtaining 
an alliance with Great Britain. His aim is the con- 
quest of new territory in eastern Europe and its 
settlement by people of German blood. But these 
statements in Mein Kampf do not seem to represent 
the attitude of the German Government of today. 
The Chancellor and many of the National Socialist 
leaders have frequently insisted upon the necessity 
of the restoration of Germany’s colonies as the best 
way out of her present economic difficulties. Dr. 
Schacht has for years been consistently and untir- 
ingly giving voice to the same conviction. In his 
address at the Leipzig Fair of 1935 he advanced the 
argument that the return of her colonies to the 
Reich would, by reducing the volume of raw mate- 
rials that Germany has to purchase abroad, relieve 
exchange difficulties; he maintained that this would, 
in turn, increase the likelihood that Germany’s for- 
eign creditors would receive what was due them. 
This was presumably an invitation to the creditors 
to use their good offices in favor of Germany’s cause. 

The National Socialists have taken great pains to 
make clear that such colonial expansion as they 


have in mind must be accomplished by peaceful 
means. In this they are probably sincere, at least 
for the present. But how can one be sure of Ger- 
many’s attitude when her program of rearmament 
shall have been completed? The very existence of 
the problem contains a latent element of conflict 
which cannot and should not be ignored. 

We are thus led to the perhaps not very new or 
original conclusion that the best method of prevent- 
ing international conflicts is a policy that is based 
on the recognition of other nations’ legitimate 
needs. To get the various nations to agree upon 
what constitutes this legitimate need is not an easy 
matter and to make them agree upon the manner 
in which such need can best be met is even more 
difficult. There is no real assurance that concessions 
would not lead to new and more extensive demands. 
Even should some nations show the fullest desire to 
cooperate there is no certainty, of course, that this 
would be met in the same spirit by other nations. 
Nevertheless the attempt should be made. Eor the 
only alternative is the road that led Italy to sacrifice 
the flower of her manhood on the battlefields of 


Books and Pamphlets 

Anmiario staiistico italiano, anno JPS5— XIII, Rome, 

Armstrong, Hamilton Fish, Hitler’s Reich, New York, 


Baravelli, G. G., Integral Land Reclamation in Italy, 
Rome, 1935. 

Baravelli, G. C., Policy of Public Works under the Fascist 
Regime, Rome, 1935. 

Bottai, Giuseppe, Esperienza Corporativa (1929-1935), 
Florence, 1935. 

Bottai, Giuseppe, Lc Corporazioni, Milan, 1935. 
Commissariato Generate dell’Emigrazione, Uemigrazione 
italiana dal 1910 al 1923, Rome, 1926. 

Confederazione Fascista dci Lavoratori del Commercio, 
Azione sindacale contro la disoccupazione, Rome, 

Daeschner, L., Die Deutsche Arbeitsfront, Munich, 


Deutsche Arbeitsfront — N. S. G. Kraft durck Freude, 
Schonheit der Arbeit, Berlin, 1935. 

Die deutsche Erzeugungsschlacht, Berlin, 1935. 

Fanno, Marco, Introduzione alio studio della teoria 
economica del corporativismo, Padua, 1935. 

Fantini, Oddonb, Stato c lavoro, Rome, 1928. 

Feder, Gottfried, Das Programm der N. S. D. A. P. und 
seine weltanschaulichen Grundgedanken, Munich, 

’^,On]y tho more important publications coi^lted in the prepa* 
ration of this volume are included in Uie lists. 



Finer, Herman, Mussolini*s Italy, London, 1935. 

Flugschriften des Reichsndhrstandes, Aujbau und Durch- 
Jiihrung der landvjirtschajtlichen Marktordnung, 
Berlin, 1935. 

Fraubndorfer, Max, Stdndischer Aufbau, Berlin, 1935. 

Gangbmi, Leleo, La politica economica e finamiaria del 
Govemo Fascista, Bologna, 1924. 

Gangbmi, Lello, Pressione tributaria, produzione e scambi 
intemazionali, Florence, 1935. 

Haider, Carmen, Capital and Labor under Fascism, New 
York, 1930. 

Hbiden, Konrad, A History oj National Socialism, Lon- 
don, 1934. 

Heiss, Friedrich, Deutschland zurischen Nacht und Tag, 
Berlin, 1934. 

Hibrl, Konstantin, Grundsdtzliches zur Arbeitsdienst- 
pflicht, Berlin, 1934. 

Hitler, Adolf, Mein Kampf, Munich, 1933. 

Hitler, Adolf, Liberty, Art, Nationhood, Berlin, 1935. 

Hochb, Werner, Die Gesetzgebung des Kabinetts Hitler, 
Berlin, 1933-1935. 

Hoover, Calvin B-, Germany Enters the Third Reich, 
New York, 1933. 

Hovel, Paul, Grundfragen deutscher Wirtschaftspolitik, 
Berlin, 1935. 

Institut International d’ Agriculture, Les conditions de 
V agriculture mondiale en 193S-1934, Rome, 1935. 

Istituto Coloniale Fascista, Annuario delle colonie ita- 
liane e paesi vicini, anno XIII, Rome, 1935. 

Istituto Nazionale Fascista di Culture, Legislatione e 
ordinamento sindacale corporative, Rome, 1934. 

Istituto Nazionale Fascista per gli Scambi con I’Estero, 
Autorizzazione ad importazioni in compensazione pri- 
vata, Rome, 1935. 

IstHuto Nazionale Fascista per gli Scambi con VEstero, 
Dati statistici sul commercio estero italiano nel quin- 
guennio 1930-1934, Rome, 1935. 



Jstituto Nazionale Fasdsta per gli Scambi con VEstero, 
Nuovo regime dellc iinportazioni e delle compensa- 
zioni priva te, Rome, 1935. 

Jacob, Ernst Gerhard (editor), KolomalpolUisches 
Qitellenheft, Berlin, 1935. 

Johae, Werner, Dos Reichserbhofgesetz, Berlin, 1934. 

Kohler, Bernhard, Des Fuhrers Wirtschajtspolitik, 
Munich, 1935. 

Kohler, Bernhard, Wirtschaft und Sozicdismvs, Berlin, 

Kretzschmann, H., und Edel, Fritz, Der Weg zum 
Arbeitsdienst, Berlin, 1934. 

von Leers, Johann, Kurzgefasste Geschichte des 
Nationahozialismus, Leipzig, 1933. 

Lessona, Alessandro, Realizzazioni e propositi del colo- 
nialismo italiano, Rome, 1935. 

Lobwenstein, Prince Hubertus, The Tragedy of a Na^ 
lion, Germany 191S-19S4, New York, 1934. 

Ludwig, Emil, Talks with Mussolini, London, 1932. 

Magri, Francesco, La bonifica dellc pahidi pontine e 
VOpera Nazionale per i Combattenti, Milan, 1933. 

Marpicati, Arturo, II Partito Fasdsta, Milan, 1935. 

DB Michblis, Giuseppe, La corporazione nel mondo, 
Milan, 1934. 

Ministere dc V Agriculture et des Forits, Les progres de 
I’agriculturc italienne en regime fasdste, Rome, 1934. 

Minister dell’ Agriculture et des Foreste, La bonifica inte- 
grate, Rome, 1935. 

Ministero delle Corporazioni Elementi di ordinamento 
corporative, Rome, 1935. 

Ministero dellc Finanze, II bilando dello Stato dal 1913- 
1914 al 1999-1930 e la finanza fasdsta a tutto I’anno 
VIII, Rome, 1931. 

Ministero delle Finanze, II bilando e il conto generate del 
patrimonio dello Stato per I’eserdzio finanziario 
1930-1931, Rome, 1932. 

Ministero delle Finanze, II bilando e il conto generate del 


patrimonio dello Stato per Veserdzio finanziario 
19S1-19S2, Rome, 1933. 

Ministero delle Finanze, La finanza statale deWanno XI 
{esercizio 193S-19SS),'Bx)ine, 1934. 

Ministero delle Finanze, La finanza statale deWanno XII 
{esercizio 19SS-19S4)t Rome, 1936. 

Missmou, Mamo, Ultalia d’oggi, Bologna, 1932. 
Monckmeieb, Otto (editor), Jahrbuch fur national- 
sozialistische Wirtschaft, Stuttgart-Berlin, 1935. 
Mobtaba, Giobgio, L’ltalia e I’economia corporativa di 
fronte alia crisi economica mondiale, Rome, 1934. 
Mobtaba, Giobgio (editor), Prospettive economiche, 
Milan, 1924^1934. 

Motz, Kabl, Blut und Boden, Berlin, 1934. 

Mussolini, Benito, Diritti e interessi dell’Italia in Africa 
Orientate, Rome, 1935. 

Mussolini, Benito, Fascism: Doctrine and Institutions, 
Rome, 1935. 

Mussolini, Benito, Four Speeches on the Corporate 
State, Rome, 1935. 

MuiAjEB-Bbadbnbubg, Was ist Arbeitsdienst? Was soil 
erf Leipzig, 1934. 

Nikisch, a.. Das Gesetz zur Ordnung der Naiionalen 
Arbeit, Leipzig, 1934. 

Noblin, Geobge, Fascism and Citizenship, Chapel Hill, 


Opera Balilla anno XI, Milan, 1933. 

L’Opera Balilla nelVanno XII, Rome, 1935. 

Opera Balilla, VIII leva fasdsta, Milan, 1934. 

Opera Balilla, Rivoluzione Fasdsta, Rome, 1934. 

Opera Nazionale per i Combattenti, La bonifica e la 
trasformazione fondiaria dell’Agro Pontino, Rome, 


Opera Nazionale per i Combattenti, II contralto di mez- 
zadria per i coloni dell’Agro Pontino, Rome, 1933. 

L’ organisation syndicale et corporative italienne, Rome, 


Organisation der deutschen Arbeitsfront und der N. S. 
Gemeinschajt Krajt durch Freude, Berlin, 1934. 

Parini, Piero, Gli italiani nel mondo, Milan, 1935. 

PracLUNi, Fabsto, The Italian Corporative State, New 
York, 1934. 

Ratjb, Ernst, Beitrage zur neuen Staats- und Wirt- 
schaftsauffassung in Deutschland und Italien, Ber- 
lin, 1934. 

Les rialisations et le developpemcnt de VCEuvre Natio- 
nale Dopolavoro, Borgo San Dalmazzo, 1933. 

Rechenschaftsbericht der deutschen Arbeitsfront, Berlin, 

Rekhs-Kredit-Gesellschaft, Deutschland^s Wirtschaft- 
liche Entvncklung, 1933, 1934, 1934r-1935, 1935, 

Reinhardt, Fritz, Die Arbeitsschlacht der Reichsregie- 
rung, Berlin, 1933. 

Relazioni e proposte della commissione per lo studio delle 
riforme constituzionali, Florence, 1932. 

Richtlinien fur die Verirauensratswahlen, 1935. 

Ropke, Wilhelm, German Commercial Policy, London, 


Rosenstock-Franck, L., USconomie corporative fasdste 
en doctrine et en fait, Paris, 1934. 

Royal Institute of International Affairs, Abyssinia and 
Italy, London, 1935. 

Royal Institute of International Affairs, The Eco- 
nomic and Financial Position of Italy, London, 


ScHACHT, Hjalmar, Speeches, 1930-1935. 

ScHACHT, Hjalmar, and others, Deutschland und die 
Wirtschaft, Berlin, 1935. 

Schneider, Herbert W., Making of the Fascist State, 
New York, 1928. 

ScHWEiGART, Hans ADALBERT, Bauemtum und Marktord- 
nung, 1934. 

Sbrinq, Max., Deutsche Agrarpolitik, Leipzig, 1934. 


Sebpieri, a., La legge svlla bonifica integrale nel quinto 
anno di applicazione, Rome, 1935. 

SoMBABT, Wbbneb, Dcutscher Sozialismns, Berlin, 1934. 

Spibito, Ugo, Capitalismo c corporativismo, Florence, 

Statistischcs Jahrbuch fur das Deutsche Reich, Berlin, 

Toynbee, Arnold J., Survey of International Affairs, 
1933, London, 1934. 

Vito, Francesco, L’economia corporativa nazionale nel- 
Vambito del mercato mondiale, Milan, 1935. 

Vito, Francesco, and others, Economia corporativa, 
Milan, 1935. 

VoLPB, Gioacchino, History of the Fascist Movement, 
Rome, 1935. 

TVas vnr erreicht haben und was wir erreichen warden! 
Berlin, 1934. 

Winter-Hiifswerk des deutschen Volkes, 1933-1934. 

TForfc of the National Fascist Institute of Social Insur- 
ance, Rome, 1935. 


Business and Financial Reports, published by the Asso- 
ciation of Italian Corporations and the Fascist Con- 
federation of Industrialists, Rome. 

Der deutsche Volkswirt, Berlin. 

The Economist, London. 

Foreign Policy Reports, New York. 

Die Form, Zeitschrift fur Gestaltende Arbeit, Berlin. 

Gazzetta Uffidale del Regno d’ltalia, Rome. 

Institut International d’ Agriculture, Bulletin mensuel de 
renseignements economique et sociavx, Rome. 

International Conciliation, published by the Carnegie 
Endowment for International Peace, New York. 

News Notes on Fascist Corporations, published by the 
Ministry of Corporations, Rome. 



Odd, Monatsschrift fur Blut und Boden, Berlin. 
Raccolta delle leggi e decreti del Regno d*Itdia, Borne. 
Riforma Sodole, Turin. 

Reichsgesetzblatt, Berlin. 

Siedlung und Wirtschaft, Berlin. 

Sindacati e Corporazioni, Borne. 

Vierteljahrshefte zur Konjunkturforschung, Berlin. 

La Vita Economica Italiana, Borne and Padua. 
Weliunrtschaftliches Archiv, Jena. 

Wirtschaft und Statistik, Berlin. 

Wochenbericht des Instituts fur Konjunkturforschung, 


Abj'ssinia. See East Africa. 

Additional exports, 212. 

Advertising Coun^, 101, 112, 

Agricultural Estate. SceReichs^ 

Alois!, Baron, 267. 

Alsace-Lorraine, 31. 

d'Annunsio, Gabriel, 5, 8, 17. 

Anti-Semitism. See Jews. 

Armament, 145, 215, 218-210, 
273, 276. 

Associations, Fascist, 86-91, 64, 
96, 120-123, 125, 127; for inte- 
gral land reclamation, 162- 
163, 165-166. 

Autarchy, 160, 192-196, 2M, 206, 

Avangvardisti, 226. 

Avantt, 9, 16. 

“Avenfino” opposition, 22-23. 

Balbo, Italo, 13. 

Baldwin, Stanley, 254. 

Bank Investigation Committee, 

112 . 

Bank of Italy, 203, 205. 

Bank Reform Law, 112-113. 

"Barter” trade, 204-205, 211. 

"Battle of the wheat," 169-174 

“Beauty of work," 152-153. 

Bela Kun, 33. 

Bergson, 58. 

Berlin, 32, 47, 64, 65, 137, 182 
188, 216, 225-225. 

Birchall, P. T., 233. 

Blanqui, 58. 

Blockade, Allied, 31, 193. 

Blocked marks, 213-214. 

Blomberg, General von, 47. 

Bolshevism, 6, 8, 11-12. 

Bonifiea Jnicgrale. See Integral 
land reclamation. 

Bonomi, Ivanoe, 15. 

Bottai, Giuseppe, 128. 

Bredow, 182. 

Briining, 43, 46. 

Budget, 168, 201, 215-216. 

Bunin, Ivan, 158. 

Bureau of Statistics, 217, 219. 

Bureaucracy, 116-117. 

Capo del Govemo. See Head 
of the Government. 

Central Corporative Commit- 
tee, 93-94. 

Chamber of Deputies. See Par- 
liament, Italian. 

Chamberlain, H. S., 58. 

Chambers of commerce and in- 
dustry, 103. 

"Changing of the guards,” 24. 

Charter of Labor, 62, 69-70, 78, 
84. 88-89, 91, 118-120, 122, 

Chigi, Palazzo, agreement of, 

Christianity, attacks on, 243. 

Church, confiict with, 241-243. 

Ciano, Count, 231. 

Civil service, 49, 

Code Napoleon, 177. 

Collective contracts, 121-124, 
142, 202. 

Colonial empire, loss of, 3, 275. 

Colonization, internal, 36, 161, 
164, 167-169, 186-187. 

Commission on the constitu- 
tion, 27. 

Communal government, 52. 



Communism, 3, 5, 7, 36, 40, 72, 
79-80, 118. 

Communist Party, 33, 36, 49- 

Communists, 42-44, 48, 136, 238. 

Concordat, 242-243. 

Confederation of Italian Indus- 
tries, 87. 

Confederation of Labor, 14. 

Confederations, Fascist, 25, 130, 

"Corporate Parliament," 94. 

Corporate State, 77, 83-84, 86, 
89-91, 98, 100, 105, 114, 116, 
128, 179. 

Corporations, Fascist, 26, 83, 
85. 88-94, 97-98, 180. 

Cortesi, Ainaldo, 269. 

Cost of bving, 129, 150, 191. 

Councils of the corporations, 
84, 92, 94, 105. 

Courts, of honor, 140-143; spe- 
cial, 23. 

Crorni, Italian. See King of 

Currency, volume in circula- 
tion, 205-206, 214. 

Darr5, Walther, 158-159, 180- 
182, 185. 

Datres Plan, 34. 

“Day of National Solidarity,” 

Delation, 44, 202-203. 

Department stores, 110-111, 148. 

Disarmament Conference, 50. 

Dividend Investment Law, 113- 

Doctrine, general characteris- 
tics, 56-58; influenced by, 58; 
supremacy of the State, 59, 
85; concept of Nation, GO- 
BS; attitude toward demoo- 
racy^ 63; hierarchy and lead- 
ership, 64-66, 115; class 

struggle, 67-68; labor, 69-72; 
slaveiy of interest, 70; land 
and the farmer, 71-72, 155- 
157; heroic element, 72-74; 

appraisal of, 75-76; attitude 
of rank and file toward, 76- 
82; free cooperation, 95-96. 

Dollar, devaluation of, 199-200, 
215, 256. 

Dollfuss, 52. 

Dopolavoro, 133, 152, 226. 

Drcxler, Anton, 37. 

East Africa, 2, 99. 117, 131, 173- 
174, 197-198, 200, 205-206, 209- 
210, 221, 252-253, 255, 257- 
262, 264-265, 271-272. 

Economist, The, 146, 216, 219. 

Election Law, 21. 

Elections, German presidential, 

Emigrant remittances, 197, 200. 

Emigration, 160, 256. 

Employment bills, 215-216. 

Employment offices, 126. 

Enabling Act, 48-50. 

Ethiopia. See East Africa. 

Facta, Luigi, 18. 

Farinacci, Roberto, 8. 

Farm indebtedness, 178, 186. 

Foret, 5, 7-8, 13. 

Foret d'Azione Rivoluzionaria, 

5 . . 

Fascio di Combattimento, 10. 

Fascist Confederation of Work- 
ers, 87. 

Fascist Institute for Land Rec- 
lamation, 165. 

Fascist Party, organization of, 
13; Rome congress of, 13; 
Mussolini offers to resign 
from, 14; Florence congress 
of, 14-15; Militia, 15, 20-22, 
29, 40, 73, 228-229; Naples 
congress of, 17; strength of, 
19; purge of, 19-20; against 
local bosses, 21; elections of 
1923, 21; and Parliament, 25; 
and the Grand Council, 27; 
constitution of, 27-28; and 
the State, 28-29; criticized by 
members, 76; and the cyndi- 



cal organization, 86; and the 
National Council of Corpo- 
rations, 91 ; representation on 
the councils of the corpora- 
tions, 92-93; and the corpo- 
rate organization, 94-95; con- 
trol over economic activities. 
97; price control, 99; and 
labor organizations, 120-121, 
153-154; and labor courts, 
122, 128; and em;}loyment 
offices, 126; and strikes and 
lockouts, 127 ; recreational ac- 
tivities, 134; relief work, 227; 
rituals and rites, 232-234; 
membership, 236-237 ; out- 
look, 237, 250; influencing 
public opinion, 256; control 
over the country, 261. 

Fascist revolution, 237. 

Fascist Saturday, 134. 

Fat Plan, 185. 

Feder, Gottfried, 38. 

Federal _ system in Germany, 
abolition of, 50-51. 

Federation of the Chambers of 
Commerce and Industry, 103- 

Federations, Fascist, 88-89, 94. 

Female labor, 148. 

Fichte, 58, 81-82. 

Ftdeikommisse, 176. 

Fiume, 2, 5, 8, 17. 

Food Estate, 180. 

Foreign indebtedness, 199, 211- 

Foreign investments, surrender 
of, 203-204. 

Foreign trade, 174, 195, 199-200, 
203, 207-211. 

Forum Mussolini, 223. 

Free Masons, 8, 23. 

Freedom, individual, 23, 48, 
239-241, 243, 248-250. 

Frick, Dr„ 47. 

Fuel, imports of, 196-197. 

Garibaldi, Giuseppe, 8. 

Oau, 51. 

General strike, 16-17. 

Geneva, 206, 261-262, 264, 267. 

German Nationalist Party, 41. 

German People’s Party, 40-41. 

German Social Democratic 
Party, 35-36, 42. 

German Social Democrats, 45, 
48, 50, 135. 

German Workers Party, 37. 

Giolitti, Giovanni, 11-12. 

Gobincau, de, 58. 

Gocbbcls, Dr., 49, 60, 66, 79, 
100, 148, 231, 237, 246. 

Gold reserve, 205, 211-212. 

Gold standard, 198. 

Golddiskonlbank, 113. 

Goring, General, 42, 47.^ 

Grand Council of Fascism, 20, 
24-25, 27-28, 94. 

Grandi, Dino, 13. 

Gunmen’, Felice, 203. 

Hauptgruppen, 101-102. 

Head of the Government, 24, 
27-28, 91. 94, 98. 

Hegel, 58. 

Hellmuth, Dr., 187-188. 

Hemon, Louis, 158. 

Hereditary farms, 174-180, 188, 

Himmler, Heinrich, 60. 

Hindenbui^, Paul von, 4243, 
45-47 52. 

Hitler,’ Adolf, repudiation of 
armament limitations, 34, 273 ; 
early steps, 37; Mein Kampf, 
38, 40, 68, 71, 73, 157, 245, 
248, 275; on land eiqjropria- 
tion, 39; at Landsberg, 40. 
233; trial of, 41; consulted 
by Hindenburg, 42; in presi- 
dential elections of 1932, 42; 
forms cabinet, 43; and the 
middle class, 44 ; iiifluence of, 
45; and proprietor class, 45; 
appointed Chancellor, 46-47; 
President of the Reich, 52; 
supreme ruler, 52-53; on de- 
mocracy, 59; on race, 60; 



and the Jews, 63, 247-248; on 
hierarchy, 64; on right and 
duty, dS-dd; on national soU- 
darity, 67; on Winter Relief, 
67, 228; on class struggle, 68, 
118; on capital and labor, 69; 
on right to work, 71 ; on dig- 
nity of labor, 71 ; on war, 73- 
74, 272; claim to spiritual 
leadership, 75; teaching of, 
79; on labor, 135; on unem- 
ployment, 143-144 ; on the 
peasants, 157; on autarchy, 
196; on duty to work, 230; 
prophet of National Social- 
ism, 231-232; held as an 
idealist, 236; admiration for, 
247; denounced, 248; on 
peace, 274; on colonial ex- 
pansion, 275. 

Hitler movement. See National 
Socialist Party. 

Hitler Youth, 153, 226. 

Hoare, Sir Samuel, 257, 263, 

Hoover, President, 218. 

Hugenberg, Dr. Alfred, 46-47, 
180, 185. 

Industrial production, index of, 
206, 217. 

Inflation, 5, 32. 

Institute for Business Research, 
144-146, 178, 215-218. 

Institute of Social Insurance, 

Integral land reclamation, 159- 

Internal debt, 205. 

International, the, 4; Third, 36. 

International Conference on 
Agricultural Science, 213. 

Istituto Mobiliare Italiano, 98. 

Istitulo per la Eicostruzione 
Jndmtriale, 98. 

James, William, 58. 

Jews, 38, 40, 45, 61, 63, 80, 111, 
148, 189, 239, 247-249. 

Kahr, von, 40. 

Kant, 58. 

King of Italy, 4, 17-18, 24, 28- 
29, 53. 

Kraft dutch Frcude. See 
“Strength through Joy.” 
Kretsbauemschaften, 182. 
Kurmark, Landcsbauemschajt, 

Labor and Economic Board, 

Labor courts, 120, 122, 125- 

Labor Front, 69, 106-108, 114, 
136-137, 139, 151, 182, 

Labor passports, 137-138. 

Labor Service, 145, 147, 188, 
229-231, 234. 

Labor Trustees, 139-141, 143. 
Laissez faire, 86. 
“Land-helpers,” 145-147, 
Landesbauemschaftcn, 182. 
Lateran Treaty, 241-242. 
Lausanne, Conference of, 35. 
Laval, Pierre, 262. 

Lavoro, 11, 16. 

League of Nations, 50, 173, 194, 
197, 252, 254, 261-269, 273. 
Lenin, 32, 250. 

Ley, Dr. Robert, 106-107, 136, 
144, 150-151, 153, 222. 

Libya, 13, 

Lira, 124, 129, 197-198, 256. 
List, Friedrich, 58. 

Littoria, 167. 

Local government, 20-21, 23. 
Lockouts, 120, 125, 127. 
London, Treaty of, 2. 

Lubbe, van der, 48. 

Ludendorff, General, 40. 

Ludwig, Emil, 62. 

Luther, Martin, 58. 

Machiavelli, 58. 

“March on Rome,” 16-19. 
Mark, 32, 213-215, 217. 
Maternity and Child Welfare 
Organization, 132. 


Matteotti, 22. 

Maxentius, Basilica of, 257. 
Mazzini, 8. 

M^sagero, II, 170. 

Militia, Fascist. See Fascist 

Ministry of Corporations, 83- 
84, 90, 94-95, 124-125. 
Ministry of Propaganda, 100, 
112, 231. 

Monopolies, 184-185, 2M. 
Montecitorio. See Parliament, 

Munich Putsch, 40-41. 
Mussolini, Benito, expulsion 
from Socialist Party, 5, 9; or- 
ganization of the Milan fas- 
cio, 10; attitude before 1921, 
10; his following in 1921, 11; 
and the Socialists, 11; his 
program in 1921, 12; on the 
Party, 13; alarmed by bru- 
talities, 14; offers to resign 
from the Fascist Party, 14; 
and party membership, 15; 
editor of Avanti, 16; on 
monarchy, 17; on Parlia- 
ment, 18; forms cabinet, 18, 
47; on democracy, 18-19, 59; 
devotion of Militia to, 20; on 
election law, 21; and Parlia- 
ment, 21-22; and the Mat- 
teotti murder, 22; and Fas- 
cist opinion, 25-26; on the 
future^ of the Chamber of 
Deputies, 26; as leadei, 37; 
inSuence of, 45; master of 
Italy, 53; on Fascist philos- 
ophy, 56; influenced by, 58; 
on the supremacy of the 
State, 59; on Boman tradi- 
tion, 62-63; on freedom, 65; 
on Boman Prussianism, 66; 
on duty, 66; on class struggle, 
67-68, 118; on dignity of la- 
bor, 71; on war, 72-74, 257; 
claim to spiritual leadership, 
75; and self-criticism, 78; on 
economic liberalism, 85; and 


.®sre6ioent of Palazzo 
Chigi, 87; definition of cor- 
porations, 91; on the corpo- 
rate system, 95; on the Cor- 
porate State, 96; association 
wi^ labor, 121; champion of 
labor, 127; and reduction of 
unemploimient, 129; and la- 
bor, 135; on land and the 
farmers, 155; proclaims the 
"Battle of the wheat,” 169; 
on the lira, 197; on t^ation, 
202; prophet of Fascism, 231- 
232; and the Holy See, 241- 
242; and anti-Semitism, 244; 
admired and denounced, 248; 
and the East African cam- 
paign, 254; anti-Africanist, 
257; and colonial expansion, 
257-258; held as friend of 
peace, 267. 

N^onal Association for Land 
Beclamation, 165. 

National Council of Corpora- 
tions, 26, 85, 90, 93-94. 

National income, 217. 

National Socialist Cell Organi- 
zation, 136, 139. 

National _ Socialist Party, or- 
ganization of, 37 ; program 
of, 38-39, 66, 118; effects of 
Allied policy on, 34-35; S-A. 
(.Sturm- Abteilung), 39-40, 43, 
46, 190, 228-229, 240; oulr 
lawed, 40; bloc with Ger- 
man People’s Party, 40-41; 
first congress of, 40; reorgani- 
zation of, 41; and Beichstag 
elections of 1924 and 1928, 

41 ; and the Young Plan, 41 ; 
and the Beichstag elections 
of 1930, 42; expected decline 
of, 42; effect of unemploy- 
ment on, 43; supported by 
young people, 44-45; and the 
proprietor class, 45; SJS. 
(Schutz-Stauffel), 46, 60, 

190, 233, 240, 246; and the 



State, 50-52; its local repr<^ 
sentatives, 51; race investi- 
gation, 61; national solidar- 
ity, 66-67; propaganda of its 
ideology, 79; and the Labor 
Front, 137 ; control over labor 
disputes, 141-142; workers’ 
contributions to,_150; control 
over labor organizations, 153- 
154; and the Reichnakrstand, 
181-182; congress in Septem- 
ber 1935, 217; relief work, 
227-228; rituals and rites, 232- 
234; headquarters of, 233; 
membership, 236-237 ; out- 
look, 237, 250; and student 
corporations, 239-240; Baltic 
Germans' influence on, 247; 
activities of, 249; militaristic 
spirit, 272; attitude of offi- 
cials toward peace, 274; pres- 
sure on public opinion, 274. 

National Socialist revolution, 

Nationalists, 12, 21, 43. 

Neurath, Konstantin, Baron 
von, 47, 54. 

New Deal, 116, 132, 232, 236. 

“New Plan," the, 209, 211, 217. 

New York Times, 233, 269. 

Nietzsche, 58. 

Nitti, Francesco, 10. 

Nordic race, 60. 

Nuremberg Laws, 245. 

Opera BaliUa, 133, 226. 

Opera Nazionale CombaUenli, 

Opponents, fate of, 238. 

Organization of National La- 
bor, German Law for, 105, 
119, 138-142. 

Orlsbauemschaflen, 182. 

Ostia, 224. 

Papen, Franz von, 42-43, 46-47. 
54, 242. 

Pareto, 58. 

Parliament, Italian, 4, 10-12, 
18-19, 21-22, 24-26, 28, 94. 

People’s Court, 49. 

Pesaro, 197-198. 

Podesla, 23-24. 

Pontine marshes, 166-169. 

Popolo d’ltalia, 9. 

Pound sterling, devaluation of, 
198-199, 215, 256. 

Prices, agricultural, 171-172, 183- 
184, 190-191. 

Private property, right of, 98- 
100, 108, 114-117, 163, 191. 

Provincial councils of corpo- 
rate economy, 94. 

Public opinion in Italy, state 
of. 261-262. 

Public works, 132, 147, 198, 202, 
205, 222. 

Prussia, 30, 47. 

Quadrumviratc, Fascist, 17. 

Quirinal, 4, 29. 

Bacc theory, 60-61, 189-191. 
See also Jews. 

Raue, Ernest, 64-65. 

Raw materials, 103, 194, 196- 
200, 207-208, 256, 269-271, 274- 

Razza, Luigi, 229, 232. 

Reconstruction of German 
Business, Law for, 101. 

Referendum of August 19, 1934, 

Reich Chamber of Culture, 100- 
101, 148. 

Reich Chamber of Economics, 
102-107, 114-115, 117, 182, 209. 

Reich Peasant Leader, 181. 

Reichsbank, 113, 196, 211. 

Reichsgruppen, 102-103, 109. 

Reichskommissar, 51. 

Reichsnahrsland, the, 100-101, 

Reichsrat, 49, 51. 

Reichstag, 36. 40-43, 47-50, 226. 

Reichswehr, 36, 47. 

INDEX 291 

Reinhardt, Herr, 217. 

Renan, 58. 

Reparation Commission, 34. 
Reparations, 3, 34-35. 
Revolution, Fascist, 53-55; Na- 
tional Sjocialist, 53-55; “spirit- 
ual," 234-237. 

Rhine provinces, 33-35, 177. 
Rhon Plan, the, 186-lW. 
Risorffimenlo, 8. 

Rohm, Ernest, 39, 52. 

Roman Law, 177. 

Rome, 16, 18, 62, 83, 223-225, 
229, 257-258, 268. 

Ropke, Wilhelm, 195. 
Rosenberg, A,, 60, 79, 246-247. 
Rosenstock-Franck, L., 122,124- 
128, 134-135. 

Rossoni, Edmondo, 86. 

Royal Institute of Interna- 
tional Affairs, 259. 

Ruhr, occupation of, 34. 

Rust, Dr,, 49. 

Sabaudia, 167. 

Scbacht, Dr. Hjalmar, 54, 102, 
106-108, 195-196, 209-211, 213- 
215, 219, 237, 276. 

Schleicher, General von, 43, 46- 
47, 52. 

Schmitt, Dr. Kurt, 102. 
Schneider, Herbert W., 7. 
Schopenhauer, 58. 

Schwerin von Krosigk, Count, 
47. 54. 

Scrip, 212-213. 

Seldtc, Franz, 47. 
Self-sufficiency. See Autarchy. 
Senate, Italian, 19, 28, 94. 
Sering, Max, 177-178, 

Shop councils, 139-142. 

Socialist Party, 5, 9. 

Socialists, 7, 10-12, 14-16, 21, 85, 

Sombart, Werner, 69, 

Sorel, George, 58, 

Soviet Union, 75, 86, 116, 248, 
Sparlakus uprising, 32. 

“Spiritual revolution," 234-237. 

Sttthlhelm, 47. 

Standard of living, 173. 

Standstill agreements, 212, 214. 

StaUkaller, 51. 

Streicher, Julius, 60, 79, 233, 

“Strength through Joy,” 151- 
152, 226, 

Strikes, 120, 125, 127-128, 142. 

Student corporations, 239-240. 

Simmer, Der, 239, 

Substitutes, promotion of, 204, 
210 - 211 . 

Superintendent of Foreign Ex- 
changes, 203. 

Surplus population, 256. 

Syndicates, Fascist, See Asso- 
ciations, Fascist. 

Tecle Hawarjate, 263. 

Temps, Le, 262, 

Territorial expansion, need for, 
252, 255, 257, 263, 265, 275- 

Teutonic heroes, 243. 

Times, The, 273. 

Tourist expenditures, 197, 200, 

211 . 

Trade unions, 15-16, 50, 106, 

Transfer moratorium, 212, 214. 

Treaties, sanctity of, 265-266. 

Trotsky, Leon, 32. 

Turgenev, I. S., 158. 

Unemployment, 43-44, 112, 129- 
132, 143-149, 165, 202, 217, 

Universities, 239-240. 

Vatican, 241-242. 

Versailles, Treaty of, 2-3, 6, 33, 
35, 38, 40, 265, 268, 273. 

Vidoni, Palazzo, agreement of, 

VSlkischer Beobackter, 41. 

Volkswoklfahrt, 227. 



Volpc, Gioacchino, 62. 

Wages, 122-123, 125-127, 129- 
130, 142, 149-151, 172, 202. 
Weimar constitution, 36, 53. 
Weimar Republic, 30, 33, 45, 
136, 186, 190. 

Wheat contests, 171. 
Winter Relief, 67, 227-228. 
Wiirzburg, 187, 189-190. 

Young Fascists, 74. 

Young Plan, the, 34, 41, 44. 

Zinoviev, 32.